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EXPORT-IMPORT BANK OF INDIA

OCCASIONAL PAPER NO. 117

INDIAN CHEMICAL INDUSTRY: A SECTOR STUDY

EXIM Bank’s Occasional Paper Series is an attempt to disseminate the findings of research studies carried out in the Bank. The results of research studies can interest exporters, policy makers, industrialists, export promotion agencies as well as researchers. However, views expressed do not necessarily reflect those of the Bank. While reasonable care has been taken to ensure authenticity of information and data, EXIM Bank accepts no responsibility for authenticity, accuracy or completeness of such items.

© Export-Import Bank of India Published by Quest Publications March 2007

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CONTENTS

Page No. List of Tables List of Exhibits List of Boxes Executive Summary 1. 2. 3. 4. 5. 6. 1. 2. 3. 4. 5. 6. Introduction Global Scenario Chemical Industry in India Analysis of Chemical Imports by Major Countries and India’s Export Markets Challenges and Strategies Outlook Select Principles of Good Laboratory Practices Anti-Dumping Cases Initiated by India Against Various Countries in the Chemical Sector (1992-2005) MFN Applied and Bound Tariffs for Chemicals and Products in Select CTHA Countries List of Countries that have joined the Responsible Care Initiative Megha Deals in Global Chemical Sector in 2005 Select Foreign Acquisitions by Indian Companies in the Chemical Sector 5 7 9 11 21 23 36 56 65 72 74 75 78 79 80 81

Annexures

Study undertaken by: Mr. S. Prahalathan, Deputy General Manager, Research and Planning Group

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List of Tables
Table No. 1. 2. 3. 4. 5. 6. 7. 8. 9. Title Pg. No. 31 32 33 35 37 39 39 40 40 49 50 51

Chemical Trade by Products in USA (2006) Chemical Trade by Products in China (2006) Production of Select Chemical Products in Japan (2005 and 2006) Production of Select Chemical Products in Canada (2005 and 2006) Installed Capacity and Production of Major Basic Chemicals in India Installed Capacity and Production of Major Basic Petrochemicals in India Installed Capacity and Production of Major Petrochemical Intermediates in India CAGR of Production by Various Chemical Sectors in India During 2001-02 to 2005-06 Estimated Size (in value) of the Chemical Industry (2005-06)

10. Investment Proposals in Indian Chemical Industry 11. FDI in Indian Chemical Industry 12. List of Chemical Items Reserved for SSI Sector

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List of Exhibits
No. Title Pg. No.

1. 2. 3. 4. 5. 6. 7. 8. 9.

10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22.

End-user Segments of Chemical Industry Sales of Chemical Industry by Select Countries (2005) Sales of Chemical Industry by Regions (2005) Share of Chemicals in Total Merchandise Exports and Manufactured Exports (2005) in the World Exports of Chemical by Regions (2005) Sectorwise Break-up of Anti-Dumping Cases – Initiations and Measures in the World (1995 – June 2006) Survival Triangle of World Chemical Industry Index of Chemical Industry Production (2002=100) in USA Comparison of Index of Industrial Production – Basic Chemicals, Manufacturing and General Index of Industrial Production in India Share of Major States in Production of Chemicals and Petrochemicals in India (2005-06) Trends in India’s Export of Select Basic Chemical Products Country-wise Export of Organic Chemicals from India (2005-06) Country-wise Export of Inorganic Chemicals from India (2005-06) Country-wise Export of Dyes, Pigments and Other Colouring Materials from India (2005-06) Country-wise Export of Pesticides from India (2005-06) Trends in Export of Petrochemicals from India Terms of Trade in Select Chemical Sectors in India (2005-06) Trends in India’s Import of Select Basic Chemical Products Source Countries for India’s Basic Chemical Imports Trends in Import of Petrochemicals in India Major Importers of Cyclical hydrocarbons (SITC Code 5112) and their Source Countries Major Importers of Polyethylene (SITC Code 5711) and their Source Countries

21 23 24 24 25 27 27 31 36

41 42 43 43 44 45 46 46 48 48 49 56 57

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Anti-Dumping Cases Initiated by India (1992 – 2005) 32.CMYK 23. Major Importers of Ether and Alcohol Peroxide (SITC Code 5161) and their Source Countries 31. Major Importers of Polycarboxylic Acids (SITC Code 5138) and their Source Countries 29. Major Importers of Monocarboxylic Acids and Derivatives (SITC Code 5137) and their Source Countries 26. Major Importers of Acrylic Monohydric Alcohol (SITC Code 5121) and their Source Countries 28. Major Importers of Acrylic Hydrocarbons (SITC Code 5111) and their Source Countries 27. Major Importers of Propylene Polymers (SITC Code 5751) and their Source Countries 25. Major Importers of Polycarbonates (SITC Code 5743) and their Source Countries 24. Major Importers of Albuminoidal Substances (SITC Code 5922) and their Source Countries 30. Possibilities of Collaboration by Chemical Industry 58 59 60 60 61 62 63 63 67 69 8 CMYK .

2. 1. 6. 5. No. Title Chemical Tariff Harmonisation Agreement Mergers and Acquisitions in Global Chemical Industry The Responsible Care Initiative Major Chemical Groups and Sub-Segments Produced in India Exim Bank’s Support to Indian Chemical Industry India: A Signatory to Chemical Weapons Convention Pg.CMYK List of Boxes No. 3. 4. 26 29 30 38 47 52 9 CMYK .

paint. rubber processing additives. also known as performance chemicals.75 trillion. oilfield chemicals. coatings.US$ 122 billion) and France (5% . other chemical intermediates. are low-volume but high-value compounds. electronic chemicals. Asia-Pacific tops the list with a share of 35% in global sales followed by Europe (34%).US$ 90 billion). including organic and inorganic chemicals. GLOBAL SCENARIO Global chemical production is growing and the growth is contributed by the chemical industry of developing countries. For example. NAFTA (25%) and Latin America (4%). Agricultural chemicals especially crop protection chemicals such as pesticides. flavors and fragrances.US$ 163 billion). In terms of regions. catalysts also come under this category.EXECUTIVE SUMMARY INTRODUCTION This study focusses on chemical sub-segments such as: ❖ Basic Chemicals also known as commodity chemicals. printing inks. individually. adhesives. synthetic rubber. man-made fibers. Sealants. plastic resins. Germany (7% . as they are large in size to have a separate industry status and are appropriately positioned for exclusive studies. USA is the single largest country with a share of 22% (US$ 380 billion) in world chemical sales. industrial cleaners and fine chemicals. World export of chemicals is estimated to be US$ 832 billion in ❖ ❖ 11 . water management chemicals. bulk petrochemicals. followed by Japan (10% US$ 194 billion). Growth in demand for chemicals in developing countries is high leading to substantial cross-border investment in the chemical sector. These chemicals are derived from basic chemicals and are sold on the basis of their function. Global sales of chemicals in the year 2005 were estimated to be around US$ 1. dyes and pigments. and fertilizers. paper additives. The study excludes drugs and pharmaceuticals. Specialty chemicals. China (9% .

The industry is committed to contribute to the sustainable development of the society as a whole. Dumping of chemicals and anti-dumping actions by countries have become part of the game plan of many firms / countries. safety and environmental performance of its products and processes. to reduce risks and to create sustainable competitive advantage. France (6% . through its ‘Responsible Care Initiative’. CHEMICAL INDUSTRY IN INDIA Chemical industry is one of the oldest industries in India. A significant share (around one-third) of production by chemical industry is consumed by itself. and China (4% . ranging from plastics and petro-chemicals to cosmetics and toiletries. Volume of production in chemical industry positions India as third largest producer in Asia (next to China and Japan). The industry. in 2005.US$ 32 billion). It is estimated that the size of Indian chemical industry is around US$ 30 billion. comprising both smallscale and large units (including MNCs) produces several thousands of products and bi-products. including their supply chain. has led to a substantial reduction in tariffs in the signatory countries. in many countries reduction in tariff has been substituted by increase in nontariff barriers. The joint framework agreement for tariff harmonization in the Uruguay Round (Chemical Tariff Harmonisation Agreement). while individual companies have increased the geographic scope of their operations. The global chemical industry is continuously working towards reduction of environmental impact of its activities. The growth in world chemicals trade has averaged out to around 12% during the period 20002005. and twelfth largest in the world. and around 12 . USA (11% . Japan (6% US$ 49 billion). and has developed systems for improving the health.US$ 51 billion).US$ 95 billion). The chemical industry contributes around 20% of national revenue by way of various taxes and levies. Globalisation of chemical industry has led to national markets being supplied from an increasing number of locations.US$ 94 billion).2005. However. The chemical industry produced around 8 million metric tonnes each of basic chemicals and basic petrochemicals. The chemical industry accounts for about 13% share in the manufacturing output and around 5% in total exports of the country. Leading chemical exporters are Germany (11% . The share of chemicals in world merchandise trade and global trade of manufactures is estimated to be 11% and 15% respectively. Chemical companies in the world are now merging their business processes.

US$ 775 million worth of inorganic chemicals. Uttar Pradesh (4%).274486 crores. dyes (6%) and pesticides (3%). major chemicals traded in the world include Cyclical hydrocarbons (SITC Code 5112). During the period August 1991 to October 2006. ANALYSIS OF CHEMICAL IMPORTS BY MAJOR COUNTRIES AND INDIA’S EXPORTS Analysis has been carried out to identify highly traded chemicals. Other major states producing basic chemicals include Maharashtra (9%). India exported US$ 4. has also been flowing into the chemical sector significantly. including foreign direct investment (FDI). Monocarboxylic acids and derivatives (5137). In addition. Polycarbonates (5743). FDI. India exported petrochemicals valued nearly US$ 4 billion. which is very essential for modern manufacturing of chemicals. The analysis revealed that in the year 2005. India imported petrochemicals valued over US$ 2 billion. Acrylic monohydric alcohol (5121).3% in total investment proposals received during this period. a share of 11. based on the import data of world chemicals at SITC classification 4digit level. Polyethylene (5711). Albuminoidal substances (5922). chemical industry has received investment proposals worth Rs. and US$ 649 million worth of pesticides. India’s export of basic chemicals amounted to over US$ 7 billion in 2005-06. respectively. India is also an importer of basic chemicals and the import value amounted to over US$ 8 billion in 2005-06. a share of around 6% in total FDI inflows into the country. China. US$ 847 million worth of tanning and colouring materials. in the year 2005-06. inorganic chemicals (28%). Other major states producing petrochemicals include Maharashtra (18%). In addition. West Bengal (12%). Polycarboxylic acids (5138). 13 . and Tamil Nadu (3%). USA and Saudi Arabia are the leading source countries for India’s chemical imports. Since August 1991. Tamil Nadu and Uttar Pradesh (6% each). FDI invlows into the chemicals sector amounted to US$ 2.10 million metric tonnes of petrochemical intermediaries in 2005-06. and till November 2006.2 billion. Gujarat is the major contributor to the basic chemical as well as petrochemical production with 54% and 59% share in all India production. Acrylic hydrocarbons (5111). Propylene polymers (5751).85 billion worth of organic chemicals. The composition of India’s chemical imports includes organic chemicals (63%). The Indian chemical industry has been receiving significant investment intentions.

The fluctuations in oil prices therefore affect the growth projections of the firms. These countries have been mostly sourcing their import requirements within the region. however. The limitation in capacity in the SSI sector put them in disadvantageous position while tapping export opportunities with large volume. These include insecticides (second major supplier with 13% share).and Ether and alcohol peroxide (5161). their source countries for imports. across the segments. India has been one of the major suppliers to the world. The installed capacities in most of the small-scale units are smaller as compared to global scales. cyclic alcohol derivatives (ranked third with 12% share). which is taking on the challenges of globalization. there are few factors. hydrocarbons derivatives (ranked second with 13% share). Now. CHALLENGES Indian chemical sector has grown a long way since its early days of independence. The sector has grown from a small-scale sector to multi-dimensional sector. SSI reservation / Fragmented nature of industry The Indian chemical industry is having a fragmented structure with more number of units in small-scale sectors spread in various parts of the country. India may endeavor to attract such manufacturing opportunities and explore possibilities of increasing its exports to European countries. Since many countries in the EU are shifting their production base to other developing countries. Indian chemical industry either uses natural gas or crude oil as feedstock for manufacturing process. as also India’s exports and major export markets. These include: High prices of basic feed stock Basic raw materials constitute major portion of cost of production (30% to 60%) in the chemical industry. Indian chemical industry holds a recognized position in the global map. cyclic hydrocarbons. and become a global player. 14 . which hinders the growth of the industry. The analyses revealed that EU. India may leverage the advancement in manufacturing technologies in these product groups to replicate in the production of other products. USA and Japan are the leading importing regions / countries for these analysed product groups. synthetic organic dyestuffs (ranked fourth with 6% share). synthetic brighteners (ranked fifth with 6% share). Analyses have been carried out in these product groups to know about the major importers of each product groups. respectively). and fluorides (both ranked ninth with 3% and 2% share. The analyses further revealed that in some product groups.

Low R&D levels The level of R&D investments in the Indian chemical sector is low at around 0. occupational safety and process management safety can easily be met if a firm is manufacturing large volume of single chemical. chemical engineering. generally sell their products as generic products without brand development. due to its very nature. both in the process chain as also in the supply chain.3% of total sales. excepting a few large producers. chemicals and petrochemicals industry is the largest segment that 15 . Application of information technology in the chemical sector is required for equipment design. the required infrastructure could be vertically integrated resulting in cost reduction. In India. application development to diversify demand. Dumping / Import Competition Chemical industry is the second largest industry that has attracted large number of anti-dumping actions in the world. There is also low level of interest amongst smallscale producers for brand development. the chemical / petrochemical industry requires certain basic infrastructure facilities. Environmental Regulations As with other industries. and process simulation that have helped in reducing product and process development time. especially in collaborative research. each unit has to create specialized facilities on its own which leads to duplication of efforts and investment. Environmental safety. Low Level of Brand Development Indian chemical producers. At present. But it may not be relatively feasible for the firms who manufacture low volume and large number of chemicals in a single plant. the chemical industry needs to comply with regulations such as Occupational Safety and Health and Process Safety Management regulations. and new product development. Low Level of Common Infrastructure In general. The areas for strengthening of R&D in chemical industry include improvements in manufacturing process for reduction in cost of production. Information technology should also be increasingly used in the area of R&D. If chemical units are clustered in close proximity. Low Level of ICT interface The usage of information technology in Indian chemical industry is relatively lower. as most of the units are in the small-scale sector. product development as also market development.

in order to garner a greater share in world chemicals market. Good Laboratory Practices. Strengthening Technological Competence Indian chemical industry should strive for continually improving its production processes and products by investing resources in technology development. Indian chemical industry needs to address various developmental issues such as sustainable chemistry. chemical producers have the responsibility in promoting safe management of substances – starting from design in production to enduse. during this period. Adhering to Environmental Norms Since chemical substances are used in manufacture of consumer items such as paint. Innovation is increasingly becoming an important factor to focus on core competence and to become a leading player in specialty products. Total Quality Management. Technological development may be achieved by the chemical industry at two levels. the industry needs to invest in technological resources Focus on R&D Indian chemical industry needs to focus on R&D in one or multiple areas. While R&D remains an universal imperative. Total Production Management and Risk Management. cosmetics and household cleaners. the chemical industry should undertake process innovation with the objective of reduction in cost of production. In addition. Further. 82 anti-dumping cases (out of 188 cases) initiated by India fall under the category of chemicals and petro-chemicals. In the bulk products segment.has initiated anti-dumping investigations during the period 1992-2005. insect spray. its purpose 16 . In the above context. Improving Basic Management Capabilities Indian chemical industry has a good record of management expertise. and their final disposal (hazardous waste). glue. STRATEGIES Focus on Core Competence Chemical products trade is increasingly getting specialised all over the world. adherence to safety and health and risk management. This could be further leveraged with techniques such as Good Manufacturing Practices. that would lead to specialized product development. it is important for the Indian chemical manufacturers to focus on select business segments where competitive advantage exists.

as new applications have to be identified to increase use and application of polymers. Industry . In addition. as most of the products in the chemical sector are commoditised. Collaboration with firms across borders for technology and investment would also give a boost to the industry.and nature varies across segments. process IT-enabled. Collaboration The chemical industry needs to enhance their collaborative efforts in order to improve competitiveness. Collaboration amongst players in the chemical industry could happen both at cluster level (for sharing of common infrastructure) as also at firm level (for sharing of knowledge and technology). marketing expenses.Academia Linkages For transforming ideas into new products. Consolidation helps the chemical industry in reduction of cost in their procurement and production. partnership between industry and academia is a must. Increasing use of IT to transact business will also help the sector. increased efficiencies in supply chain management and enhanced presence in various regions. engineering and procurement to manufacturing by integrating them with business processes in all these areas. through mergers and alliances are now achieving economies of scale all over the world. Information Technology (IT) can bring a good change in entire process cycle from technology. The petrochemical sector should focus on application R&D. Thus. This will eventually result in higher efficiency for the industry. the players should also achieve greater level of industry-institutional partnership for knowledge development and sharing. It is important for Indian chemical industry to consolidate their operations and emerge as global winners. Indian chemical industry should leverage the potential of educational and research institutions Increasing ICT interface Chemical firms in India can gain a lot by making their manufacturing 17 . Chemical firms. Consolidation The new trend in chemical industry is competing through consolidation. Such consolidation exercises also provide for reduction in overheads. Firms in knowledge based chemical sector should focus on R&D with the objective of achieving product leadership and process innovations. The basic chemical sector should focus on process innovation and product development and strengthen their competitiveness through improvements based on performance and quality of products.

Increasing Consumption Levels of Chemicals Per capita chemical consumption in India is low as compared to world standards (estimated to be one-tenth of world average). The Government has already initiated policies for setting up of integrated Petroleum. Creation of Modernization Fund A modernization fund on the lines of technology upgradation fund established for the textile sector may be created to strengthen the technological competence of the industry. This could be achieved through 18 . Increasing consumption level in the domestic market would ignite the prevailing latent demand. the industry may be encouraged to set up mega chemical plants that could contribute to increased production as well as employment generation. The industry may endeavour to concentrate more on issues such as brand building. However. the chemical industry. Sodium Ferrocyanide. Sodium Cyanide) are still reserved for production under small-scale sector. export promotion and market development. Calcium Carbide. Chemicals and Petrochemicals Investment Regions (PCPIR). Setting up of Chemical Parks or Mega Chemical Estates In order to address the issue of creation of common infrastructure.to source intellectual as well as human capital. It is also important to consider establishment of exclusive Chemical Zones on the lines of Special Economic Zones to give a fillip to the industry. De-reservation of Select Chemical Production Many chemical products (eg. Marketing and Promotion Indian chemical industry should increasingly focus on marketing and promotion to achieve greater share in global chemical trade. Citric Acid. Potassium Permanganete. Such linkages may be effectively used for setting up of in-house R&D facility or for outsourcing R&D activities. In such Parks / Zones. Most of the firms operating at the global level are big ones and enjoy economies of scale. costcompetitiveness as well as technological compliance cannot be achieved without operating under scale economies. in association with the Government may establish exclusive Chemical Parks – a concept similar to the Software / Hardware Technology Park. De-reservation of chemical products reserved for production under small-scale sector can be a good measure to support the globalisation efforts of the industry.

depends upon and determines the trends in the overall economy. strong research capabilities. could 19 .increasing applications through R&D and enhancing the knowledge of end consumers. strategic marketing alliance with multinationals and trading companies. dyestuffs and intermediates. India has significant presence in production of basic organic and inorganic chemicals. opportunity for value addition using contract manufacturing or contract research. fine and specialty chemicals. investment flows and technology transfers. as also the linkages with the rest of the world in terms of international trade. by virtue of its diversity. The performance and outlook of the chemical industry. Companies with competitive advantages. particularly in the context of India’s development process. pesticides. Thus. the chemical industry bears a close correlation not only with the quantum of overall economic growth but also with the contents and quality of growth. safety. health and environment protection issues are becoming important challenges for the Indian chemical industry. Indian chemical companies with strong systems and organized operations are likely to be benefited further. In addition. translate their capabilities and establish a dominant presence in both international and domestic markets. In the years to come. an association representing 80% of the world manufacturers of chemicals has reiterated its support for a new round of multilateral trade negotiations in the World Trade Organization. stricter enforcement of good manufacturing practices. conforming to international quality standards. petrochemicals. paints. with the reduction in tariffs. strategic marketing alliances for domestic sales and exports. Today. On the domestic front. cosmetic and toiletry product segments. ICCA’s priorities OUTLOOK Indian chemical industry has come a long way. backward and forward linkages and development of domestic capacity to reduce dependence on imported raw materials are key success factors for Indian chemical industry. Indian manufacturers are addressing such challenges in an organized way. Use of advanced technology. The International Council of Chemical Associations (ICCA). various new avenues are likely to arise in the Indian chemical industry like structural shifts. like having competence in the areas of high value added chemicals.

include elimination of chemical tariffs by the year 2010. simplification of customs procedures and full implementation of TRIPs agreement. the tariff-free world would pose stiff competition. harmonization of anti-dumping practices. While the harmonization of antidumping practices would benefit developing countries like India. 20 .

Exhibit 1 END-USER SEGMENTS OF CHEMICAL INDUSTRY SOURCE: Adapted from Report of the Task Force on Chemical Industry. INTRODUCTION Chemical industry is one of the key industries in contribution to the world economic output and employment. February 2002. Thus. housing. the business cycles of end user segments significantly affect the chemical industry. communication. clothing. transport as well as entertainment. Government of India.1. Product-lines of the chemical industry are used in every area of life such as food. 21 . The industry has contributed around US$ 1. The industry provides products and services that improve the quality life of customers and communities.75 trillion in global value of sales in 2005.

paint. and are also known as performance chemicals. Specialty chemicals are lowvolume but high-value compounds. The industry is heterogeneous in nature with many sectors such as organic. coal and electricity as energy. electronic chemicals. which has advanced technology and production skills. dyes. adhesives. industrial cleaners and fine chemicals. paints. printing inks. water management chemicals. oil. The chemical industry is generally categorised into the following three broad segments: ❖ Basic chemicals. other chemical intermediates. dyes and pigments. flavors and fragrances. include organic and inorganic chemicals. rubber processing additives. Agricultural chemicals. bulk petrochemicals. especially crop protection chemicals such as pesticides. plastic resins. oilfield chemicals. These chemicals are derived from basic chemicals and are sold on the basis of their function. Specialty chemicals are produced in select countries. natural gas liquids. The industry is one of the largest employers (employs over 10 million persons worldwide) and contributes to the welfare and employment on a global scale. synthetic rubber. also known as commodity chemicals. inorganic. man-made fibers.The chemical industry uses raw materials such as gas. The role of Research & Development (R&D) is crucial in the chemical industry due to the constant need for innovation. The chemical industry is energyintensive in its manufacturing process as also in terms of usage of raw materials. paper additives. Chemical industry is also major demand driver for other sectors such as energy. coal. For example. pesticides and specialty chemicals. coatings. the industry also draws up its raw materials from such energy sources as primary ingredient in production. ❖ ❖ 22 . environmental technology. While using natural gas. information technology. catalysts also come under this category. Sealants. oil. water and minerals to produce a vast array of products.

EXPORTS According to World Trade Organisation’s data. GLOBAL SCENARIO PRODUCTION Global sales of chemicals in the year 2005 were estimated to be around US$ 1.US$ 450 billion). European Chemical Industry Council 23 . American Chemistry Council. Exhibit 2 SALES OF CHEMICAL INDUSTRY BY SELECT COUNTRIES (2005) SOURCE: German Chemical Industry Association.9% (US$ 163 billion). followed by Europe (34% .5% (US$ 90 billion). Latin American countries accounted for US$ 73 billion (4%) of global sales in 2005. respectively in 2005. In terms of regions. The share of chemicals in global merchandise trade and global trade of manufactures is estimated to be 11% and 15%.US$ 609 billion) and NAFTA (25% . world export of chemicals is estimated to be US$ 832 billion in 2005. Germany -7% (US$ 122 billion) and France .75 trillion. USA is the single largest country with a share of 22% (US$ 380 billion) in world chemical sales. followed by Japan – 10% (US$ 194 billion). China . Asia-Pacific tops the list with a share of 35% in global sales (US$ 615 billion).2.

2%) in total merchandise exports.1% in 2005.9% in 2005. leading exporters in the order of 24 . European Chemical Industry Council Exhibit 4 SHARE OF CHEMICALS IN TOTAL MERCHANDISE EXPORTS AND MANUFACTURES EXPORTS IN THE WORLD (2005) SOURCE: World Trade Organisation Export of chemicals by European region has highest share (15. The growth in world chemicals trade has averaged out to around 12% during the period 2000-2005. while that of Asia was the lowest at 8. In terms of individual countries. Export of chemicals by CIS region has highest share (21%) in total export of manufactures. while that of Africa was the lowest at 3.Exhibit 3 SALES OF CHEMICAL INDUSTRY BY REGIONS (2005) SOURCE: German Chemical Industry Association. American Chemistry Council.

36 billion) and Japan (3% US$ 30 billion) According to World Trade Organisation. France (6% US$ 51 billion). has led to a substantial reduction in tariffs in the signatory countries. and China (4% . The share of intraregional trade by Europe was 72%.US$ 95 billion). However.5% .US$ 49 billion). France (5% .US$ 32 billion).39 billion). The joint framework agreement for tariff harmonization in the Uruguay Round. contributed by the chemical industry in developing countries. Trade between developing countries is also on the rise due to the increased production capacity in developing countries. reduction in tariff has been substituted by increase in non-tariff barriers. in many countries. the share of intraregional trade by Europe. leading to substantial cross-border investment in the chemical sector. Italy (4% .their share in world exports include Germany (11% . Japan (6% . Leading importers are USA (11. UK (4. North America and Asia have been significant.US$ 94 billion). (Chemical Tariff Harmonization Agreement or CTHA).US$ 46 billion). while that of North America and Asia have been 40% and 65% respectively. World Trade Organisation 25 . USA (11% . The tariffs in countries not participating in the CTHA are also remaining high.% .US$ 67 billion). Many CTHA TRENDS IN GLOBAL CHEMICAL INDUSTRY World chemical production is growing and the growth is Exhibit 5 EXPORTS OF CHEMICAL BY REGIONS (2005) SOURCE: International Trade Statistics – 2005. Growth in chemicals demand in developing countries is also high. Germany (8% . Transnational corporations through cross border investment and production cater to the demand growth in developing countries.US$ 92 billion). China (9% US$ 75 billion).

members are seeking for inclusion of more chemical producing countries under CTHA or other such mechanisms that might bring same tariff harmonization results. Slovakia. Chemical companies in the world are now merging their business processes. which led to a substantial reduction and harmonization of chemical tariffs in HS Chapters 28-39. Mongolia. the European Union. the United Arab Emirates and the United States of America. Bulgaria. Ecuador. CTHA members include: Australia. Singapore. Norway. Box 1 CHEMICAL TARIFF HARMONISATION AGREEMENT In the Uruguay Round. Taiwan. the Czech Republic. Hong Kong. CEFIC 26 . During the same period. Estonia. Panama. during the period 1995 to June 2006. SOURCE: World Trade Organisation. According to data collated by World Trade Organisation. the Republic of Korea. Jordan. 578 anti-dumping cases have been initiated in the chemical sector. Japan. although the focus continues to be on participation. The economic transformation in the world in the last two decades has altered the landscape of the traditional chemical supply chain. The result was the Chemical Tariff Harmonization Agreement (CTHA). New Zealand. while individual companies have increased the geographic scope of their operations. Current discussions involve the expansion of both product coverage and participation in that Agreement. Such alterations have also changed organizational boundaries of multinational firms and have pushed the frontier of information technology as a key enabler to this business process transformation. next only to metals / metal processing sector. Qatar. including their supply chain. Globalisation of chemical industry has led to national markets being supplied from an increasing number of locations. select WTO Members have agreed to harmonize tariffs on a broad range of chemical goods to promote liberalization in this sector and to develop a more predictable and transparent global tariff structure for this industry. Switzerland. Dumping of chemicals and antidumping actions by countries have become part of the game plan of many firms / countries. second largest sector. Canada. At present. second largest sector with a share of 20%. with information technology to better manage unexpected events to reduce risks and to create a sustainable competitive advantage. People’s Republic of China. in 381 cases the member countries have taken anti-dumping measures.

Exhibit 6 SECTORWISE BREAK-UP OF ANTI-DUMPING CASES – INITIATIONS AND MEASURES IN THE WORLD (1995 – JUNE 2006) SOURCE: World Trade Organisation Exhibit 7 SURVIVAL TRIANGLE OF WORLD CHEMICAL INDUSTRY SOURCE: Exim Bank Research 27 .

suppliers and service providers. Development of waste minimization (be it energy or energy resources as raw materials) systems in a consistent manner. In order to implement sustainable development. Creating a policy for usage of economically and environmentally optimized materials and energy use with a thrust on sound attitude towards usage of scarce resources. The concept of sustainable development is receiving a growing recognition in the chemical industry. about 9% of total production costs are being incurred by the industry due to energy use. as early as possible. Technology is becoming a key enabler in the world chemical industry with the wake of increasing complexity. with analytical capabilities to integrate across the enterprise and to close the loop between planning and execution. Some of the parameters that are being addressed by the chemical industry include: ❖ ❖ Use of scientific environment monitoring systems. For 28 . on an average. Enhancing systems for plant and product safety and improving the efficiency of waste disposal systems. as also the production related issues (consumption of energy and energy resources as raw materials). integration and collaboration. with the objective of integrating environmental protection considerations into products and processes. Appropriate provision for reuse or recycling of used substances and products ❖ ❖ ❖ The chemical industry is an energy intensive industry.The chemical industry is riding on the big wave of automation. which addresses the problems of users (both intermediate and end users). environmental and safety standards have been set for the chemical industry. Successful chemical firms are deploying an adaptive business network that gives them the ability to quickly sense and respond to changes in the extended supply chain. The planning process in the world chemical industry is becoming more and more interactive and demand-driven with additional information flowing into the planning systems directly from the customers. It is expected that the demand for automation would flow across organizational boundaries within the enterprise. Chemical firms now require viable supply chain. Technology has been performing as key enabler in transforming the chemical companies to become more responsive and competitive without sacrificing costs.

safety and environmental performance of its products and processes. Since the reservoir of energy resources is finite. of which China alone accounted for 112 deals. with a value of US $ 1 billion and more. the innovation in the world chemical industry is enabling other industries to use resources more efficiently with less environmental impact. Perhaps. competitive access to energy is necessary to the chemical industry. Majority of the deals in 2005 were in the basic chemical sector (55%). their proper management is a crucial pillar of sustainable development. In the year 2005 alone. with an aggregate value of US $ 82. Asia Pacific region witnessed 263 deals. through its ‘Responsible Care’ initiative. cumulatively accounting for 63% (US $ 32 billion) of total deals concluded in this year. followed by Japan 63. Box 2 MERGERS AND ACQUISITIONS IN GLOBAL CHEMICAL INDUSTRY A study by PriceWaterHouseCoopers has estimated that over 2000 deals were in the chemicals sector during the period January 2003 to December 2005. number of deals witnessed by this sector was 95 with a cumulative deal value of US $ 55 billion. this ratio can raise upto 60%. Mergers and Acquisitions Activity in the Global Chemicals Industry 2003-2005. and thereby contributes to the sustainable development of the society as a whole. The global chemical industry is continuously working towards reduction of environmental impact of its activities. Thus. Strategic investors have collectively invested nearly US $ 38 billion (about 68% of the total value of deals). 29 . followed by specialty and fine chemicals (20%). The global trends in mergers and acquisitions have indicated that most of the chemical companies were interested in improving their market position in Europe and North America. These include 35 mega deals.1 billion.manufacture of some chemicals. and India 24. with a cumulative deal value of over US $ 130 billion. There were 15 deals with the deal value of US $ 1 billion or more. polymers (16%) and diversified chemicals (9%). Strategic investors played a major role in many of the deals in the year 2005. but prefer to expand in Asia by means of investments in capacity expansion. SOURCE: PriceWaterHouseCoopers. In the year 2005. The global chemical industry has committed to continuously improving the health. The Responsible Care initiative is currently implemented in over 50 nations with chemical manufacturing operations.

and enhances accountability through its requirement to develop credible processes to verify that member companies are meeting Responsible Care goals and expectations.2% of total employment generated by the manufacturing sector. it is estimated that around 5 million indirect employment is created by the chemical industry. The value added in the Japanese chemical industry accounted for 11% of total value 30 . In addition. promotes cooperation with governments and organizations in the development and implementation of effective regulations and standards. national and international levels to listen to and address their concerns and aspirations. With a sales turnover of US$ 380 billion and export turnover of US$ 94 billion. employing over 250. supports education and research on the health. SOURCE: Status Report on Responsible Care Initiative. encourages companies and associations to inform their public about what they make and do. The industry accounts for 6. International Chemical Councils Association accounting for 90% of global chemical production. The chemical industry in Japan consists of over 4000 units.Box 3 THE RESPONSIBLE CARE INITIATIVE The Responsible Care initiative: ◆ ◆ ◆ ◆ ◆ promotes mutual support between companies and associations through experience sharing and peer pressure to identify and implement best practices. safety and environmental issues on chemical processes and products.000 persons. The industry ranks second in terms of productivity – the per employee value added in the US chemical industry is estimated to be US$ 200 per annum – second amongst all manufacturing sectors. the export orientation of the chemical industry in USA works out to 25% in 2005.. including the reporting of performance data and the products they make. Japan Chemical industry in Japan is the second largest in the world (next only to USA) with a turnover of US$ 194 billion in 2005.9 million workers directly. helps the industry to engage and work in partnership with stakeholders at the local. PROFILE OF LEADING CHEMICAL PRODUCING COUNTRIES USA The chemical industry in USA has over 15000 units and employs around 0.

In the last one decade. With an export value of US$ 49 billion in 2005. China has displaced France and Germany to move to the third slot in the world chemical production. The Chinese chemical industry exported goods valued US$ 32 billion in 2005. the R&D expenditure as a percentage of sales accounted for 5%. the Chinese Government 31 . the Chinese chemical industry is third largest in the world. the export orientation is estimated to be 20%. China With a sales turnover of US$ 163 billion in 2005. export orientation of Japanese chemical industry was 25%. thus.1980 13299 2267 8319 8699 SOURCE: Chemical and Engineering News added in the manufacturing sector. The growth in the value of output in Chinese chemical industry is quite high and increasing every year.Exhibit 8 INDEX OF CHEMICAL INDUSTRY PRODUCTION (2002=100) IN USA SOURCE: Chemical and Engineering News Table 1 CHEMICAL TRADE BY PRODUCTS IN USA (2006) (US$ Million) Type of Chemicals Organic Chemicals Inorganic Chemicals Plastics Dyes and Colourants Others Total Exports 29470 8980 32482 5367 17865 94164 Imports 42676 10960 19183 3100 9546 85465 Trade Balance .13206 . and second largest in Asia (next to Japan). However. R&D expenditure by chemical industry in Japan accounted for 16% of total business R&D. Chemical majors in China are mainly public sector firms.

32 .000 chemical units in China. the German chemical industry has an export orientation of 77%.000 persons.508 . next to Automobiles.000 jobs indirectly.Table 2 CHEMICAL TRADE BY PRODUCTS IN CHINA (2006) (US$ Million) Type of Chemicals Organic Chemicals Inorganic Chemicals Dyes and Pigments Other Chemicals Total including others Exports 15222 7371 2954 8719 34266 Imports 29127 6157 3462 11470 50216 Trade Balance . The chemical industry in Germany employs around 450. However.15950 SOURCE: Chemical and Engineering News continues to actively steer market entry for foreign companies. The R&D intensity of the French chemical industry was over 3% of sales.000 persons directly and another 600. and exports around 60% of its turnover. some of them are well-known household names across the globe. With an export turnover of US$ 95 billion. majority of which are set up as joint ventures. Exports accounted for onesixth of total exports of the manufacturing sector in France.13905 1214 . France Germany The German chemical industry consists of over 2000 firms. There are over 10.2751 . The industry invests around US$ 10 billion in With a sales turnover of US$ 90 billion. the French chemical industry is the fifth largest in the world and second largest in Europe. Research and Development (R&D). German chemical industry is estimated to be having 10% share in total manufacturing output. The sales turnover of German chemical industry is estimated to be US$ 122 billion. The R&D intensity of German chemical industry is estimated to be around 6%. The chemical industry in France is second largest manufacturing sector. while the R&D budget represented over 20% of the total value of investment into industrial R&D in France. With an export turnover of US$ 51 billion. The industry has around 1000 units providing employment to around 200. one of the largest in the world. over 90 percent of German chemical firms are small and medium enterprises with less than 500 employees. the chemical industry in France is the largest exporting sector.

0 .7 1.4 .5.0 3.3 .1 1.3 .5 .0.5.2 .3.7 .8 .7 0.3 .2.3 6.7 .4 0.3.1 2.Table 3 PRODUCTION OF SELECT CHEMICAL PRODUCTS IN JAPAN (2005 AND 2006) (000 Tonnes) Chemicals Inorganic Chemicals Ammonia Ammonium Sulphate Carbon Black Chlorine Liquid Hydrochloric Acid Hydrogen Peroxide Nitrogen Oxygen Sodium Hydroxide Sodium Silicate Sulfuric Acid Titanium Dioxide Organic Chemicals Acetic Acid Acetone Acryl nitrite Benzene Butadiene Butanol Captrolactum Cyclohexane Ethylene Ethylene Dichloride Ethylene Glycol Ethylene Oxide Octanol Phenol Phthalate Plasticizers Phthalic Anhydride Polypropylene Glycol Propylene Purified Terephthalic Acid Styrene Toluene Toluene disocyanate Xylene P-Xylene 2005 1318 1458 805 601 2276 197 11435 11371 4552 546 6546 259 599 546 742 4980 1040 513 458 723 7618 3689 841 1005 279 938 315 239 339 6030 1472 3392 1676 216 5570 3358 2006 1316 1457 825 579 2281 211 11890 11708 4399 517 6984 244 585 516 653 4726 981 499 485 746 7406 3517 766 976 265 823 281 174 336 5936 1491 3318 1614 219 5598 3384 Growth (%) .27.5.8.7 .5.0 .8 SOURCE: Chemical and Engineering News 33 .2 .8 .9 .2.1 .10.2 .12.5 0.5.0 .2.9 3.5 .2 .8 .1.1 4.9 .5.2 .3.2 7.4.3.7 5.0.0.12.2.

the UK chemical industry produced goods worth US$ 50 billion. The export intensity thus worked out to 85%. Exports of chemicals by UK was estimated to be US$ 38 billion in 2005. and accounted for around 2% of national GDP and over 10% of gross value added in the manufacturing sector. R&D intensity of UK chemical industry is estimated to be 3% in 2004. The industry employs around 130. the production of Italian chemical industry was valued at US$ 60 billion. The export intensity of the UK chemical industry thus works out to 76%. In 2005. Exports to turnover have grown from 15% to 43% in 15 years. which is over 10% of capital investment in manufacturing sector. the export orientation of the Italian chemical industry thus works out to 43% in 2005. UK Chemical industry is one the largest manufacturing sectors and top ranking export sector in UK. 34 . The UK chemical industry provides direct employment to around 200. and foreign multinationals (35%).000 persons. Exports by the chemical industry in Canada amounted to US$ 22 billion in 2005. after Germany and France. According to a survey by Federation of Italian Chemical Associations (FEDERCHIMICA). Canada The Canadian chemical industry witnessed a turnover of US$ 26 billion in 2005. over 70% of Italian chemical enterprises are engaged in R&D activities. the best performance among European countries. the chemical industry in UK made a capital investment of around US$ 2 billion. In the year 2005.000 persons. In 2005. but also SMEs in Italy are strongly oriented to international markets. Export turnover of Italian chemical industry was US$ 26 billion in 2005.000 persons and helps in creation of indirect employment to equal number of persons.Italy Chemical industry in Italy is the third largest in Europe. Not only large firms. Italian large enterprises (23%). The industry is well represented by small and medium enterprises (42% of total units). The industry employed around 80000 persons and provides indirect employment to another 200.

2 .3.2.6 14.6 .4.9 SOURCE: Chemical and Engineering News 35 .6 .5 .2.Table 4 PRODUCTION OF SELECT CHEMICAL PRODUCTS IN CANADA (000 Tonnes) (2005 and 2006) Chemical Items Ammonia Ammonium Nitrate Benzene Butadiene Chlorine Hydrochloric Acid Nitric Acid Polyethylene Polystyrene Propylene Sodium Chlorate Sodium Hydroxide Sulfuric Acid 2005 4607 1206 798 245 1004 141 1147 3366 198 737 1169 1117 3755 2006 4444 1120 724 251 988 162 1121 3613 194 755 1125 1071 3828 Growth (%) .8 .2 1.2 7.3 .5 .0 2.7.3 2.9.3.1.

A significant share (around one-third) of production by chemical industry is consumed by itself. MANUFACTURING AND GENERAL INDEX OF INDUSTRIAL PRODUCTION IN INDIA SOURCE: Central Statistical Organisation. Government of India 36 . It is estimated that the size of the Indian chemical industry is around US$ 30 billion. CHEMICAL INDUSTRY IN INDIA OVERVIEW Chemical industry is one of the oldest industries that has contributed significantly to the industrial and economic growth of India. The industry. Ministry of Statistics and Programme Implementation. produces several thousands of products and bi-products.3. ranging from plastics and petrochemicals to cosmetics and toiletries. comprising both small scale and large units (including MNCs). Exhibit 9 COMPARISON OF INDEX OF INDUSTRIAL PRODUCTION – BASIC CHEMICALS. Volume of production by chemical industry positions India as third largest producer in Asia (next to China and Japan) and twelfth largest in the world.

This works out to a capacity utilization level of over 80%. Government of India. caustic soda and liquid chlorine) are the largest sub-segment in production of chemicals amounting to around 70% share in volume terms. the chemical trade balance is positive.2 for the manufacturing sector and 221. in the same year. however. India is also an importer of chemicals. Alkalis (such as soda ash.5 for general index.5 in 2005-06 as compared to the index of 234. CAPACITY AND PRODUCTION OF MAJOR CHEMICAL SUBSEGMENTS The volume of major basic chemicals produced in India amounted to around 8 million metric tonnes (MTs) in 2005-06. The chemical industry accounts for about 13% share in the manufacturing output and around 10% in total exports of the country. The industry contributes around 20% of national revenue by way of various taxes and levies. The data on Index of Industrial Production (IIP) compiled by Central Statistical Organisation shows that the IIP (1993-94=100) for basic chemicals and chemical products has increased to 258. Table 5 INSTALLED CAPACITY AND PRODUCTION OF MAJOR BASIC CHEMICALS IN INDIA Major basic Installed chemical segments Capacity as of March 2006 6602680 742015 1791858 148551 52043 9337147 2001-02 Production (MT) 2002-03 2003-04 2004-05 2005-06 (P) Alkali Inorganic Organic Pesticides Dyes and Dyestuff Total Above 4342305 374132 1140405 81803 24789 5963434 4792345 403827 1319967 69565 26196 6611900 5070374 440608 1444510 85118 25940 7066550 5271675 508157 1472819 93966 28498 7375115 5474614 543965 1509546 82240 29541 7639906 SOURCE: Chemical and Petrochemical Statistics at a Glance.The basic chemicals and chemical products industry has grown greater than the growth in manufacturing sector as also the general industrial production. P – Provisional 37 . Ministry of Chemicals and Fertilizers.

Acetaldehyde. Food colours and Napthols. Caustic soda. Ethyl acetate and Ortho nitro toluene. Elastomers. ONCB. and Liquid chlorine Inorganic chemicals – Such as Aluminum fluoride. Maleic Anhydride. Calcium carbide. Aniline. Polymers (such as Low / High Density Polyethylene. Organic pigment colours. Sodium chlorate. Acetic anhydride. Fast colour bases. Polymer. PNCB. This works out to a capacity utilization level of over 98%.Box 4 MAJOR CHEMICAL GROUPS AND SUB-SEGMENTS PRODUCED IN INDIA Alkali – Such as Soda ash. – Pesticides and insecticides registered under the Insecticide Act of 1968. This works out to a capacity utilization level of over 90%. Acetone. Sulphur dyes. Chloro methanes. Phenol. Penta-Erithritol. Olefins (such as Ethylene. Propylene and Butadiene) are the largest subsegment in production of petrochemicals amounting to around 46% share in volume terms. Nitrobenzene. MEK. Methanol. Basic dyes. Fibre intermediates. Ingrain dyes. Titanium dioxide and Red phosphorous. 38 . Ethanolamines. The volume of major petrochemical intermediates produced in India amounted to around 10 million MTs in 2005-06. Acid direct dyes. Citric acid. – Such as Azo dyes. Polypropylene and Polystyrene) are the largest sub-segment in production of petrochemicals amounting to around 63% share in volume terms. Potassium chlorate. Formaldehyde. Pigment emulsion. – Such as Synthetic fibres. Oil soluble (solvent dyes). Surfactants and Performance plastics. Pesticides Dyes and dyestuff Petrochemicals The volume of major basic petrochemicals produced in India amounted to around 8 million MTs in 2005-06. Vat dyes. Organic chemicals – Such as Acetic acid. Carbon black. Reactive dyes. Optical whitening agents.

Ministry of Chemicals and Fertilizers. Ministry of Chemicals and Fertilizers. Government of India. P – Provisional 39 . Government of India.Table 6 INSTALLED CAPACITY AND PRODUCTION OF MAJOR BASIC PETROCHEMICALS IN INDIA Basic petrochemical segments Synthetic fibre yarn Polymers Elastomers Synthetic detergent intermediates Performance Plastics Total Above Installed Capacity as of March 2006 2416500 4727750 147580 577500 2001-02 Production (MT) 2002-03 2003-04 2004-05 2005-06 (P) 1668553 3974170 79372 424760 1754556 4175085 81506 447426 1867746 4499167 87394 453379 1875420 4775745 96775 487895 1906193 4768085 110212 555474 136580 8005910 89883 6236738 94656 6553229 99257 7006943 112834 7348669 126681 7466665 SOURCE: Chemical and Petrochemical Statistics at a Glance. P – Provisional Table 7 INSTALLED CAPACITY AND PRODUCTION OF MAJOR PETROCHEMICAL INTERMEDIATES IN INDIA Basic petrochemical intermediates Fibre Intermediates Olefins Aromatics Installed Capacity as of March 2006 2847200 4374800 3142400 2001-02 Production (MT) 2002-03 2003-04 2004-05 2005-06 (P) 2417331 3696808 2242549 8356688 2648473 3961673 2426258 9036404 2691098 4281669 2424962 9397729 2851365 4667885 2451310 2963039 4679743 2536549 Total Above 10364400 9970560 10179331 SOURCE: Chemical and Petrochemical Statistics at a Glance.

26 0.08 3.99 5.77 7.54 4.63 6.Table 8 CAGR OF PRODUCTION BY VARIOUS CHEMICAL SECTORS IN INDIA DURING 2001-02 TO 2005-06 Sector / Sub sector Basic Chemicals Alkali Inorganic Organic Pesticides Dyes and Dyestuff Basic Petrochemicals Synthetic Fibre Yarn Polymers Elastomers Synthetic Detergent Intermediates Performance Plastics Petrochemical Intermediates Fibre Intermediates Olefins Aromatics CAGR % (2001-02 to 2005-06) 6.39 4.05 5. Exim Research.22 6. Table 9 ESTIMATED SIZE (IN VALUE) OF THE CHEMICAL INDUSTRY (2005-06) (Rs.12 4.13 SOURCE: Compiled from Chemical and Petrochemical Statistics at a Glance 2005-06. Estimated Turnover (2005-06) 10200 5200 4800 3000 2200 7000 32400 40 .96 9.39 5.90 8. Crores) Item Organic chemicals Pesticides Dyes and Pigments Alkalies Inorganic chemicals Other chemicals Total (above) SOURCE: CMIE.66 8.60 3.

West Bengal (12%). non-tariff barriers associated with environmental issues are influencing the chemical imports by developed countries.In value terms the size of the basic chemical industry in India is estimated to be around US$ 7. structural changes have happened in chemicals trade. Other major states producing petrochemicals include Maharashtra (18%). EXPORTS Since the formation of World Trade Organisation. In terms of consumption. Gujarat is the major contributor to the basic chemical as well as petrochemical production with 54% and 59% share. Exhibit 10 SHARE OF MAJOR STATES IN PRODUCTION OF CHEMICALS AND PETROCHEMICALS IN INDIA (2005-06) SOURCE: Compiled from Chemical and Petrochemical Statistics at a Glance. the industry is widespread and has presence in both small and largescale sector. The advantages of SSI reservations and the fiscal concessions extended to this sector facilitated establishment of large number of units in the Small Scale Industry (SSI) sector.11.5 billion in 2005-06. respectively. Government of India. Ministry of Chemicals and Fertilizers. India has been increasing its export of chemical products in the recent years. The industry accounts for approximately one-third of the total consumption. in all India production. Indian chemical industry itself is its largest consumer. Uttar Pradesh (4%) and Tamil Nadu (3%). With over 40000 units. as the basic chemicals undergo several processing to manufacture downstream chemicals. Other major states producing basic chemicals include Maharashtra (9%). The trend analysis of India’s exports of major chemical products in the last four years is given in Exhibit . Tamilnadu and Uttar Pradesh (6% each). However. There has been reduction in tariff for chemical imports in developed countries. 41 .

formaldehyde and acetaldehyde. In the year 200506. alkalies. Indonesia and Germany. Ministry of Commerce and Industry.85 billion. and fertilizers. but not of basically carbon structure. Organic chemicals Most of the chemical compounds that contain carbon atoms are called organic chemicals. China. The share of USA market in India’s exports was around 11%. Major markets for Indian organic chemicals include USA. India is expected to have produced 1. In the year 2005-06. Analysis of production and export performance of major chemical segments are given in the following sections: (April – June) of 2006-07 were valued at US$ 1. India’s export of organic chemicals in the year 200506 was valued at US$ 4. Inorganic chemicals are mostly used in detergents. Organic chemicals are used in many household products like paints. These include nitrate. Major products produced in India are carbon black. fluoride and metals. titanium dioxide and calcium carbide.Exhibit 11 TRENDS IN INDIA’S EXPORT OF SELECT BASIC CHEMICAL PRODUCTS SOURCE: Directorate General of Commercial Intelligence and Statistics. Government of India. The exports during the first quarter Inorganic chemicals Inorganic chemicals are substances of mineral origin. soaps. In addition. 42 .32 billion. varnishes and products of cleaning and disinfecting. acetic acid. Major products produced include methanol. India is estimated to have produced 544.5 million MTs of organic chemicals.000 MTs of inorganic chemicals.

Government of India. Ministry of Commerce and Industry. hair color preparations. detergent powder. depilatories.. Ministry of Commerce and Industry. 43 . caustic soda and liquid chlorine. The estimated total production of these items in the year 2005-06 was 5.Exhibit 12 COUNTRY-WISE EXPORT OF ORGANIC CHEMICALS FROM INDIA (2005-06) SOURCE: Directorate General of Commercial Intelligence and Statistics. Exhibit 13 COUNTRY-WISE EXPORT OF INORGANIC CHEMICALS FROM INDIA (2005-06) SOURCE: Directorate General of Commercial Intelligence and Statistics. soda ash.47 million MTs. alkaline disk batteries are also produced in India. which are commonly used to manufacture products like bleach. ammonia. drain cleaners. Government of India. India has built up capacity of alkali chemicals viz.

44 . sulphur dyes. Dyes and Pigments Indian dyestuff sector is one of the important segments of Indian chemical industry. Iran. Major markets for India’s inorganic chemicals include China. India has achieved an export level of US$ 228 million. Ministry of Commerce and Industry. leather. azo dyes. reactive dyes and pigment emulsion. Major destinations of Indian dyestuff materials are USA. China alone accounted for about 42% of India’s exports in 200506.541 MTs. PIGMENTS AND OTHER COLOURING MATERIALS FROM INDIA (2005-06) SOURCE: Directorate General of Commercial Intelligence and Statistics. UK. paper. China. Indian dyestuff sector has emerged as a leading player in the world market with a share of over 6%. The dyestuffs find usage either as raw material or for direct application in a number of manufacturing sectors like textiles. USA. Turkey. the production of dyes and dyestuffs in India was estimated to be 29. In the first quarter of 2006-07 (April – June). In the year 2005-06. India exported tanning and colouring materials (including paints) worth US$ 847 million in 2005-06.India exported inorganic chemicals valued US$ 775 million in 2005-06. Major dyestuffs produced in India are organic pigment colours. Sri Lanka. Singapore and Indonesia. The Netherlands and Belgium. Italy. Germany. printing Exhibit 14 COUNTRY-WISE EXPORT OF DYES. Government of India. inks and foodstuffs. Exports during the first three months (April-June) of 2006-07 were US$ 231 million.

Brazil and Belgium. France. numbering over 100 units. indigenously produces over 60 technical grade pesticides.240 MTs of pesticides. but has registered rapid growth since 1980’s. Government of India.Pesticides India. export of petrochemicals amounted to nearly Rs. elastomers. polymers. Petrochemicals The petrochemical industry is relatively a new entrant in the Indian chemical industry.800 crores. synthetic detergents intermediates and performance plastics. (including fungicides. Argentina. which has a share of over three-fourth of total exports of pesticides. exports were valued at US$ 152 million. The Netherlands. The industry comprises of both large and SME manufacturers. Today petrochemical products permeate the entire spectrum of daily use items and almost cover entire sphere of life. In value terms. Exhibit 15 COUNTRY-WISE EXPORT OF PESTICIDES FROM INDIA (2005-06) SOURCE: Directorate General of Commercial Intelligence and Statistics. herbicides. The petrochemical industry mainly comprises of synthetic fibres. Indian petrochemical industry is estimated to have produced over 18 million MTs of products. in the year 2004-05. In the year 2005-06. 45 . Major component of India’s exports of pesticides is insecticides. the industry is estimated to have produced 82. India’s exports of pesticides amounted to US$ 649 million in 2005-06. Ministry of Commerce and Industry. weedicides. In the current year (AprilJune 2006-07). at present. In the year 200506. Besides. rodonticides and fugiments). India also has the presence of leading multinational firms.16. Major markets for Indian pesticides include USA.

the terms of trade have been positive for dyes and intermediates. Ministry of Chemicals and Fertilizers. Ministry of Chemicals and Fertilizers. it may be 46 . India’s chemical imports are either for the purpose of further processing in the chemical industry or for usage as intermediates in other manufacturing sector.Exhibit 16 TRENDS IN EXPORT OF PETROCHEMICALS FROM INDIA SOURCE: Annual Report – 2005-06. However. IMPORTS India is also an importer of chemical products. Thus. Government of India. Government of India Exhibit 17 TERMS OF TRADE IN SELECT CHEMICAL SECTORS IN INDIA (2005-06) SOURCE: DGCIS. the two major product groups traded by India. Overall the terms of trade have been negative in inorganic and organic chemical sectors. pesticides and petrochemicals segments. * Petrochemical data represents the year 2004-05.

including dyes. The Bank. under its Overseas Investment Finance Programmes. Saudi Arabia (6%). In addition. Singapore. India has been sourcing its imports mainly from China (20% of India’s total chemical imports). 2006. dyes (6%) and pesticides (3%). concluded that overall. supported a number of small chemical units through commercial bank network. Morocco and Germany (5% each). in association with the Centre for Promotion of Imports from Developing Countries. import of chemicals has been lower than exports. followed by USA (8%). The Bank has helped a few chemical companies to invest in overseas ventures for manufacturing and marketing.18. the Bank through its refinance programmes. The Bank has been helping the chemical manufacturing and exporting units to modernise and upgrade their production facilities. Organic chemicals accounted for around 63% of India’s chemical imports followed by inorganic chemicals (28%). The Netherlands facilitated Participation of Indian fine and speciality chemical firms in the Export Promotion Programme (EPP) in Europe. INVESTMENT PROPOSALS INCLUDING FOREIGN DIRECT INVESTMENT IN INDIAN CHEMICAL INDUSTRY Increasing investments in any sector will have significant effect on growth. organisation of production and operational management. amounted to over Rs. install pollution control and environmental safety systems of internationally acceptable standards and develop export market for value added products through various products and services. Basic chemical imports by India amounted to over US$ 8 billion in 2005-06. training in export marketing. The trend analysis of India’s imports of major basic chemical products in the last four years is given in Exhibit . 1000 crores as of December 31.Box 5 EXIM BANK’S SUPPORT TO INDIAN CHEMICAL INDUSTRY Exim Bank has been closely associated with the export efforts of Indian chemical industry. EPP has provided combination of elements such as assistance on adhering to regulations and standards. This works out to a share of 5% in the Bank’s total loan exposure during this period. marketing. development productivity 47 . Exim Bank’s loan exposure to chemicals sector.

274486 crores. chemical industry has received investment proposals worth Rs. and competitiveness. Since August 1991 and till November 2006.28% in total investment proposals received during this period. including Foreign Direct Investment (FDI). The investment proposals include over 8500 industrial entrepreneurs Exhibit 19 SOURCE COUNTRIES FOR INDIA’S BASIC CHEMICAL IMPORTS SOURCE: Directorate General of Commercial Intelligence and Statistics. 48 . a share of 11.Exhibit 18 TRENDS IN INDIA’S IMPORT OF SELECT BASIC CHEMICAL PRODUCTS SOURCE: Directorate General of Commercial Intelligence and Statistics. The Indian chemical industry has been receiving significant investment intentions. Ministry of Commerce and Industry. Government of India. Ministry of Commerce and Industry. Government of India.

which is very essential for modern manufacturing of chemicals. Department of Industrial Policy and Promotion.2 billion.07 12. transportation and fuels. Government of India memoranda and over 500 letters of intent / direct industrial licenses filed for production of chemicals. FDI. Table 10 INVESTMENT PROPOSALS IN INDIAN CHEMICAL INDUSTRY Sl. Ministry of Chemicals and Fertilizers. services sector. During the period August 1991 to October 2006. Secretariat for Industrial Approvals. FDI inflows into chemicals sector amounted to US$ 2. telecommunication. with an estimated employment generation for over 1 million persons.Exhibit 20 TRENDS IN IMPORT OF PETROCHEMICALS IN INDIA SOURCE: Annual Report – 2005-06. Government of India. 49 . No Sector Investment Proposals (Rs.00 SOURCE: SIA Statistics. Chemicals sector was ranked at sixth position following electrical equipments. a share of around 6% in total FDI inflows into the country. Crores) 512652 313883 274486 Share in Total Investment Proposals 21.90 11. December 2006. has also been flowing into this sector significantly.28 1 2 3 Metallurgical Industries Electrical Equipments Chemicals (Other than Pharmaceuticals and fertilizers) Total Investment Proposals 2432713 100.

Table 11 FDI IN INDIAN CHEMICAL INDUSTRY Sl. which is an universal. Chemicals and Petrochemicals Investment Regions (PCPIR). non- 50 .64 9.89 9.00 SOURCE: SIA Newsletter. These include: abolition of industrial licensing to most of the chemical sub-sectors. Now. augment exports and generate employment.43 3797.65 2238.82 13. No 1 Sector Electrical equipments (including computer software and electronics) Services Sector Telecommunications Transportation Fuels (Power & Oil refinery) Chemicals (Other than Pharmaceuticals and fertilizers) Total FDI (excluding acquisition of shares and stock swaps) FDI Inflows (US$ Million) 6712.54 3460. into the regions. Secretariat for Industrial Approvals.26 Share in Total FDI Inflows 17. PCPIR would reap the benefits of co-siting. Government of India.31 2731. Government is a signatory to Chemicals Weapons Convention. there are only around 25 chemical items reserved for production in small-scale sector. thereby facilitating greater investment in technology upgradation and modernization.11 5. GOVERNMENT INITIATIVES AND POLICIES The Government has been announcing a number of measures to improve the competitiveness of the Indian chemical industry. excepting a small list of hazardous chemicals.01 7.84 38382. networking and greater efficiency through use of common infrastructure and support services.49 2 3 4 5 6 5235. The Government is also continuously reducing the list of reserved chemical items for production in the small scale sector. Such an initiative is likely to attract major investment. The Government has initiated policies for setting up of integrated Petroleum.83 100. both domestic and foreign. Such an industrial complex would boost manufacturing activities. November 2006. Approval is being granted for FDI up to 100 percent in the chemical sector. Department of Industrial Policy and Promotion. which would have enabling infrastructure that would provide conducive and competitive environment for setting up of manufacturing units.

calcium. 3. by Table 12 LIST OF CHEMICAL ITEMS RESERVED FOR SSI SECTOR Sl. 18. 23 24 25 Item Water soluble wood preservative based on copper chrome arsenic boric compounds Dyestuff – Basic dyes Azo dyes Naphthols Phthalocyanine Blue (except for captive consumption for manufacture of Phthele Cyanine green) Reactive dyes Fast colour bases Pyrasolones Potassium citrate – industrial grade Diethyl phthalate Diocytyl phthalate Niacinamide Paint dryers-Napthhenates octoates linolcates etc. Chlorinated paraffin wax (upto 60% of chlorine content) Lanolin anhydrous Turpentine by steam/hydro-distillation process PVC compounds Alkyd resins (except for captive consumption) Potassium nitrate produced from salt petre Barium carbonate Copper sulphate . 16. 2. of lead.other than manufactured as primary producer as a by-product Zinc sulphate-other than manufactured as primary producer as a byproduct. 10. No 1. 8. 2000. 4. manganese. use and stockpile of all chemical weapons. Government of India. India has passed the Chemical Weapons Convention Act. transfer. acquisition. multilateral Disarmament Treaty that bans the development. which has come into force in 2005. 9. 17. 20. Necessary rules. etc. 12. 7. to facilitate the implementation of the Act have also been notified. 19. Agro and Rural Industries.. Magnesium sulphate Sodium silicate Calcium silicate SOURCE: Ministry of Small Scale Industries. 51 . 11. 5. 21.discriminatory. 22. 13 14.. The Government is taking steps to create awareness in the industry about its obligations. 15. zinc. cobalt. 6. production. under the Chemical Weapons Convention.

Schedule – 2 contains such precursors. Schedule – 1 lists chemicals that are produced and stockpiled as chemical weapons. Declarations and verifications are the two important aspects for implementation of the Convention. each country is required to have a domestic legislation. India is a signatory to this convention. Necessary rules. use and stockpile of all chemical weapons. non-discriminatory. by organizing a number of awareness programmes all over the country. production. 2000. since these chemicals are capable of generating Schedule 1 chemicals. The Convention permits commercial production of those chemicals. India has been making declarations within the prescribed time frame. 2. To be able to discharge the obligations under the Convention. Government of India 52 . Inspections are routinely conducted by the OPCW to ensure that the activities in schedule chemicals are in accordance with the provisions of the Convention. which pose significant risk to the objective and purpose of the Convention. to facilitate the implementation of the Act have also been notified. import and export of the scheduled chemicals and their production facilities. which bans the development. Ministry of Chemicals and Fertilizers. 3. India has passed the Chemical Weapons Convention Act. which has come into force in 2005. under the Chemical Weapons Convention. Schedule – 3 lists dual-purpose chemicals that have a large number of legitimate civilian. which makes the mandatory filing of correct information about various activities in scheduled chemicals. The convention is being implemented by the Organization for the Prohibition of Chemical Weapons (OPCW) located in The Hague. SOURCE: Department of Chemicals and Petrochemicals. Declarations in respect of relatively large number of plant sites producing other Discrete Organic Chemicals are also required to be made. transfer. multilateral Disarmament Treaty.Box 6 INDIA: A SIGNATORY TO CHEMICAL WEAPONS CONVENTION The Chemical Weapons Convention is a universal. The Convention identifies toxic chemicals on three schedules: 1. which are used for non-prohibited purposes. Ministry of Chemicals and Fertilisers is taking steps to create awareness in the industry about its obligations. Each nation is required to make annual declarations of the production. acquisition. commercial applications and which could also be used for purposes of developing chemical weapons.

FIRM LEVEL INITIATIVES At firm level too. through global presence. A firm manufacturing oleo chemicals has adopted various supply chain management strategies. Such a strategy helped the firms to have continuous upgradation in technology. emergency response and product safety. One of the leading firms in the agrochemical sector has acquired several manufacturing facilities in both developed and developing country markets. Selfassessment reports are being obtained from Responsible Care companies. several initiatives are being taken to strategically position in the global market place. brand development. resulting in a wide and superior product portfolio. backward / forward integration.organizing a number of awareness programmes all over the country. Managing supply chain in international marketing is another strategy adopted by Indian chemical firms. such as having bulk storage tanks with leading ship-lines. and to explore possibilities of adapting the technology to meet the specific requirements of the Indian market. ICC has prepared codes. Nearly 100 member firms of ICC have signed up indicating their commitment to the Responsible Care Initiative. teachers. product registration and aggressive marketing. and safe transportation of hazardous chemicals. Indian chemical firms have in place technical agreements with multinational firms to keep abreast of the technological development in the global chemical industry. fire / police personnel.also known as Indian Chemical Manufacturers Association) is the nodal point / signatory representing India under the Responsible Care Initiative. to manage the supply chain in international markets. pollution prevention. Member companies of ICC are encouraged to dialogue with local communities and groups such as students. Indian chemical firms have strived to increase their market share 53 . guidance notes for implementation of process safety. although many firms are interested in getting external audit. INDUSTRY INITIATIVES Indian Chemical Council (ICC . strategic alliances and establishment of subsidiaries. employee health and safety. supported by vast distributor network. However. custom built rail/road tankers exclusively for its bulk products and warehousing facilities for packaged goods in various places. the firm has built a network across the globe and strategically positioned for continuous expansion. ICC is continuously interacting with regulatory bodies on various issues like emergency preparedness. external auditing has not been introduced. Through such acquisitions.

The firm. The firm through innovative use of coke briquettes made from coke fines (rather than using the expensive metallurgical coke) in its kilns has also brought down the cost of energy. Another leading manufacturer of acetyls is using molasses based production process. equipped with advanced process equipments and analytical instruments. While some of them have started separate entities for manufacture of specialty chemicals.Strategies have also been adopted by Indian chemical firms to cut down cost of production through leveraged buy-out for sourcing cost efficient raw materials and solutions for energy efficiency. a leading specialty chemical manufacturing firm has changed its name with the vision of re-branding from a commodity chemical manufacturer to specialty chemical manufacturer and to move up in the value chain. in which molasses is used as feedstock. A leading soda ash manufacturing firm bought a manufacturing facility in Romania to tap the natural resources available in east and central European countries and to become low cost producer of soda ash. Some Indian chemical firms are engaged in continuous research and development activities to innovate new applications to increase end user segments. Such innovation in manufacturing process has helped the firm in overcoming the cost cycles that affects the chemical industry worldwide. An Indian firm manufacturing building chemicals has adopted this strategy to consolidate the market position and to enhance the range of products. The chemical manufacturers are also addressing the environmental 54 . A leading firm engaged in manufacture of performance polymers works closely with customers to innovate new products to suit the end users. leveraging its expertise in handling hazardous chemicals and distillation and crystallization operations. Consolidation through buy-outs of brands and business is another strategy adopted by Indian chemical firms. The firm has also bought leading retail brands of drawing brushes and colours to enhance the market presence in retail segment. also undertakes research and development in areas such as agrochemicals and specialty chemicals. is undertaking customized synthesis of organic chemical products. A leading chemical firm. Several manufacturers of bulk chemicals have started focussing on moving up in the value chain to manufacture specialty chemicals. These include custom manufacturing and private labeling. Indian chemical firms are leveraging their manufacturing expertise and enter into contract manufacturing with multinational firms.

55 . Many Chlor Alkali manufacturers have moved away from Mercury Cell Technology to Membrane Cell Technology in order to be energy efficient and environment friendly. A leading manufacturer of organic acids and pigments has established modern biological effluent treatment plant to ensure zero pollution from the entire complex.issues through technological solutions.

4. ANALYSIS OF CHEMICAL IMPORTS BY MAJOR COUNTRIES AND INDIA’S EXPORT MARKETS

Analysis has been carried out to identify highly traded chemicals, based on the import data of world chemicals at SITC classification 4digit level. The analysis revealed that in the year 2005, major chemicals traded in the world include Cyclical hydrocarbons (SITC Code 5112), Polyethylene (5711), Polycarbonates (5743), Propylene polymers (5751), Monocarboxylic acids and derivatives (5137), Acrylic hydrocarbons (5111), Acrylic monohydric alcohol (5121),

Polycarboxylic acids (5138)), Albuminoidal substances (5922), and Ether and alcohol peroxide (5161). Analyses have been carried out in these product groups to know about the major importers of each product groups, their source countries for imports, as also India’s exports and major export markets. World imports of cyclical hydrocarbons are estimated to be US$ 30 billion in 2005. Major

Exhibit 21 MAJOR IMPORTERS OF CYCLICAL HYDROCARBONS (SITC CODE 5112) AND THEIR SOURCE COUNTRIES

SOURCE: COMTRADE, International Trade Centre, Geneva.

56

importers are China, Taiwan, Belgium, and USA. China and Taiwan have mainly sourced from Japan and South Korea. While Belgium has sourced from other EU countries such as Netherlands, Germany and UK; USA has sourced from Canada and Korea. India’s exports of cyclical hydrocarbons in 2005 amounted to US$ 815 million. India’s share in global trade of cyclical hydrocarbons was around 2.7% in 2005. India has exported cyclical hydrocarbons mainly to Indonesia, Pakistan and Singapore. India may explore possibilities of increasing its exports to EU and USA. Polyethylene imports by the world in 2005 are estimated to be US$ 28 billion. Major importers of

polyethylene are China, Germany and USA. China has sourced its import requirements mainly from Asian countries such as Korea, Saudi Arabia and Malaysia; while Germany has sourced from EU partners, USA has primarily sourced from Canada. India exported US$ 267 million worth of polyethylene in 2005. With such a level of exports, India accounted for around 1% of global imports of polyethylene. Major market for India’s exports is China, which accounted for about 56% of India’s total exports of polyethylene. However, India’s share in total imports of polyethylene by China amounted to only 4%. India may explore possibilities of increasing its exports to Germany and USA.

Exhibit 22 MAJOR IMPORTERS OF POLYETHYLENE (SITC CODE 5711) AND THEIR SOURCE COUNTRIES

SOURCE: COMTRADE, International Trade Centre, Geneva.

57

Exhibit 23 MAJOR IMPORTERS OF POLYCARBONATES (SITC CODE 5743) AND THEIR SOURCE COUNTRIES

SOURCE: COMTRADE, International Trade Centre, Geneva.

Global import of polycarbonates is valued at over US$ 22 billion. Major importers include China, USA and Germany. China has principally sourced its imports from Asian countries such as Taiwan, Japan and Thailand. While USA has sourced from Canada, the source countries for Germany are principally EU countries such as Netherlands, Belgium and Italy. India exported polycarbonates worth US$ 370 million in 2005. India accounted for around 2% of global imports of polycarbonates. Major markets for India’s polycarbonates are USA, UAE, Saudi Arabia and Israel. USA alone accounted for one-fourth of India’s total exports. India may explore possibilities of tapping markets such as China and Germany.

World import of propylene polymers is valued at US$ 21 billion in 2005. Major importers of propylene polymers are China, Germany and Italy. China’s major sourcing partners are Korea, Taiwan and Singapore. Germany and Italy have mainly sourced from EU countries such as Belgium, Netherlands and France. In 2005, India’s exports of propylene polymers amounted to US$ 241 million - a share of around 1% in global imports. India’s major markets for propylene polymers are China, Pakistan and Vietnam. China alone accounted for around 20% of India’s total exports of propylene polymers. However, India’s exports of propylene polymers accounted for around 1% of China’s total imports of propylene polymers. India may

58

explore possibilities of increasing its export of propylene polymers to China and EU countries such as Germany and Italy. World imports of monocarboxylic acids and derivatives amounted to US$ 15 billion in 2005. Belgium, China and USA are the major importers accounting for a cumulative share of around 30% in world imports. India’s exports amounted to US$ 126 million in 2005, a share of little less than 1% in global imports. Belgium has mainly imported from UK, Germany and USA; while China has imported mainly from Asian countries such as Singapore, Japan and Taiwan. USA has principally sourced from China, Japan and UK. India’s major export markets are USA, China and UK.

However, India’s market share was negligible in these markets. India may explore possibilities of increasing its export of monocarboxylic acids and derivatives to these markets. World import of acrylic hydrocarbons is valued at US$ 14 billion in 2005. Major importers are Belgium, Germany and USA. These three countries cumulatively accounted for over 40% of world imports in 2005. Major source countries for Belgium and Germany are European countries such as Netherlands and UK. Major source country for USA is Canada, accounting for over 70% of market share. India, in the year 2005, exported acrylic hydrocarbons valued at US$ 98 million. Major

Exhibit 24 MAJOR IMPORTERS OF PROPYLENE POLYMERS (SITC CODE 5751) AND THEIR SOURCE COUNTRIES

SOURCE: COMTRADE, International Trade Centre, Geneva.

59

Geneva. cumulatively accounting for two-third of India’s exports. International Trade Centre. 60 . Geneva. Malaysia and China. markets for India’s export of acrylic hydrocarbons are Taiwan. India may explore possibilities of increasing its export of acrylic hydrocarbons to EU countries such as Belgium and Germany and USA. Exhibit 26 MAJOR IMPORTERS OF ACRYLIC HYDROCARBONS (SITC CODE 5111) AND THEIR SOURCE COUNTRIES SOURCE: COMTRADE.Exhibit 25 MAJOR IMPORTERS OF MONOCARBOXYLIC ACIDS AND DERIVATIVES (SITC CODE 5137) AND THEIR SOURCE COUNTRIES SOURCE: COMTRADE. International Trade Centre.

India’s export of polycarboxylic acids in 2005 was US$ 85 million. Spain and France. While Germany has sourced from EU countries such as UK. Brazil and Malaysia. 61 . and Asian countries such as Japan. China alone accounts for over 40% of global imports of polycarboxylic acids in 2005. Taiwan and Japan. Germany and Italy. World import of polycarboxylic acids is estimated to be US$ 14 billion in 2005. India’s export value of US$ 125 million in 2005 accounted for around 1% of global imports of monohydric alcohol. International Trade Centre. Venezuela and Canada. from countries such as Trinidad and Tobago. Italy and Netherlands. Major importers include China. Italy has sourced from other EU countries such as Belgium. India’s exports are principally oriented towards Netherlands. Geneva. Major importing countries are USA. Major Exhibit 27 MAJOR IMPORTERS OF ACRYLIC MONOHYDRIC ALCOHOL (SITC CODE 5121) AND THEIR SOURCE COUNTRIES SOURCE: COMTRADE. USA has principally sourced from America region. Japan and Germany.In 2005. These four countries cumulatively account for around 40% of global imports. global import of monohydric alcohol was estimated to be around US$ 14 billion in 2005. USA and China. while Japan has sourced from Saudi Arabia. India may explore possibilities of increasing its export of monohydric alcohol to EU countries such as Germany. China has imported mainly from Asian countries such as Korea. China has sourced from Malaysia and Singapore. China.

India may explore possibilities of increasing its export of albuminoidal substances to EU countries such as Germany. India’s export of albuminoidal substances was valued at US$ 128 million in 2005. USA has mainly imported from New Zealand. Netherlands has imported from mainly Germany and Saudi Arabia. India exported US$ 70 million worth ether and alcohol peroxide in 2005. These three countries cumulatively accounted for around one-fourth of total world import of albuminoidal substances in 2005. Major markets for India are USA. International Trade Centre. UAE and Venezuela. India may explore possibilities of increasing its export of polycarboxylic acids to EU countries such as Germany and Italy. World import of ether and alcohol peroxide was estimated at around US$ 12 billion in 2005. USA alone accounted for around two-third of India’s export of albuminoidal substances in 2005. UAE and Japan. Major source markets for Belgium include Netherlands. UAE and China. Germany has mainly imported from Netherlands. Major export markets for India were China. Exhibit 28 MAJOR IMPORTERS OF POLYCARBOXYLIC ACIDS (SITC CODE 5138) AND THEIR SOURCE COUNTRIES SOURCE: COMTRADE. France and Switzerland. Thailand and New Zealand. 62 . Major importers are USA. Japan has mainly imported from USA. Geneva. Germany and USA. Ireland and Canada. Netherlands and Belgium. Germany and Japan.markets for India’s export of polycarboxylic acids are Saudi Arabia. USA’s main sourcing partners are Saudi Arabia. World import of albuminoidal substances was valued at over US$ 12 billion in 2005. Major importers are USA.

Exhibit 30 MAJOR IMPORTERS OF ETHER AND ALCOHOL PEROXIDE (SITC CODE 5161) AND THEIR SOURCE COUNTRIES SOURCE: COMTRADE. 63 . Geneva. India may explore possibilities of increasing its export of ether and alcohol peroxide to USA and EU countries such as Belgium. China alone accounted for over one-third of India’s exports of ether and alcohol peroxide to the world. International Trade Centre. Geneva. International Trade Centre.Exhibit 29 MAJOR IMPORTERS OF ALBUMINOIDAL SUBSTANCES (SITC CODE 5922) AND THEIR SOURCE COUNTRIES SOURCE: COMTRADE. Indonesia and Netherlands.

It may be mentioned that in some product groups. and fluorides (both ranked ninth with 3% and 2% share. cyclic alcohol derivatives (ranked third with 12% share). India may endeavor to attract such manufacturing opportunities and explore possibilities of increasing its exports to European countries. synthetic organic dyestuffs (ranked fourth with 6% share). These countries have been mostly sourcing their import requirements within the region. India has been one of the major suppliers to the world. synthetic brightners (ranked fifth with 6% share). USA and Japan are the leading importing regions / countries for these analysed product groups. to replicate in the production of other products and become a global player across the segments. These include insecticides (second major supplier with 13% share). 64 . respectively). India may leverage the advancement in manufacturing technologies in these product groups to other products. Since many countries in the EU are shifting their production base to other developing countries. hydrocarbons derivatives (ranked second with 13% share). cyclic hydrocarbons.The product / country analyses show that EU.

The limitation in capacity in the SSI sector put them in disadvantageous position while tapping export opportunities with large volume. High prices of basic feed stock Basic raw materials constitute major portion of cost of production (30% to 60%) in the chemical industry. Low R&D levels R&D intensity is assuming greater significance for many of the manufacturing segments. as their margins may go under pressure during oil crisis. Now. Since. chemical industry is a knowledgebased industry. which hinders the growth of the industry. Indian chemical industry either uses natural gas or crude oil as feedstock for manufacturing process. the manufacturers are unable to pass-on the cost escalation (occurring due to sudden increase in oil prices) to end consumers. the competitiveness of the units can be strengthened only through supply of new and innovative products. Indian chemical industry holds a recognized position in the global map. The level of R&D investments in the 65 . however. The fluctuations in oil prices therefore affect the growth projections of the firms. The sector has grown from a small-scale sector to multi-dimensional sector.5. application development to diversify demand. and new product development. CHALLENGES AND STRATEGIES CHALLENGES Indian chemical sector has grown a long way since its early days of independence. The areas for R&D in chemical industry include improvements in manufacturing process for reduction in cost of production. At times. The installed capacities in most of the small-scale units are smaller as compared to global scales. there are few factors. which is taking on the challenges of globalization. These include: SSI reservation / Fragmented nature of industry The Indian chemical industry is having a fragmented structure with more number of units in small-scale sectors spread in various parts of the country. Cost optimization is thus critical for the chemical units.

At present. Environmental Regulations Safety.3% of total sales. both in the process chain as also in the supply chain. Low Level of ICT interface Globally. In the supply chain. it is being felt that the production and export earnings of this sector would receive a quantum jump if an industrial estate dedicated to the chemical industry could be set up. excepting a few large producers. There is also low level of interest amongst smallscale producers for brand development. But it may not be Low Level of Common Infrastructure In general. Low Level of Brand Development Indian chemical producers. In the above context. information technology is being extensively used in several areas like chemical processing and manufacturing. and process simulation that has helped in reducing product and process development time. the required infrastructure could be vertically integrated resulting in cost reduction. product development as also market development. As with other industries. the chemical / petrochemical industry requires certain basic 66 . and an effective green belt segregating the industrial units from human settlements. especially in collaborative research. due to its very nature. each unit has to create specialized facilities on its own which leads to duplication of efforts and investment. The usage of information technology in Indian chemical industry is relatively lower. generally sell their products as generic products without brand development. the critical infrastructure requirements include a good port. Information technology is also increasingly used in the area of R&D. In the process chain. Environmental safety. health and environment protection issues are becoming important concerns for the Indian chemical industry. as most of the units are in the small-scale sector. Application of information technology in the chemical sector is mainly for equipment design. If chemical units are clustered in close proximity. the chemical industry needs to comply with regulations such as Occupational Safety and Health and Process Safety Management regulations. infrastructure facilities. chemical engineering. occupational safety and process management safety can easily be met if a firm is manufacturing large volume of single chemical.Indian chemical sector is low at around 0. the critical infrastructure requirements include a common effluent treatment plant. chemical storage terminal. and adequate berthing facilities.

Innovation is increasingly becoming an important factor to focus on core competence and to become a leading player in specialty products. In the above context. Such strategies would help Indian chemical manufacturers to establish relationship with their customers in profitable segments and exit non-competitive segments. chemicals and petro-chemicals industry is the largest segment that has initiated anti-dumping investigations during the period 1992-2005. 82 antidumping cases (out of 188 cases) initiated by India fall under the category of chemicals and petrochemicals. during this period. Government of India relatively feasible for the firms who manufacture low volume and large number of chemicals in a single plant. In India. it is important for the Indian chemical manufacturers to focus on select business segments where competitive advantage exists. the chemical industry is the second largest industry that has attracted large number of anti-dumping actions in the world. 67 .Exhibit 31 ANTI-DUMPING CASES INITIATED BY INDIA (1992 – 2005) SOURCE: Ministry of Commerce and Industry. Dumping / Import Competition As mentioned earlier. STRATEGIES Focus on Core Competence Chemical products trade is increasingly getting specialised all over the world.

In addition. It may be mentioned that in addition to the chemical industry. There are also instances of legislative pronouncements in many countries on the use of chemicals. Technological development may be achieved by the chemical industry at two levels. Many chemical consuming countries are working towards development of inherently safer chemical products (such as less polluting solvents) and processes (such as use of renewable feed-stocks). The Principles of Good Laboratory Practices have been developed to promote the quality and validity of test data used for determining the 68 . In the bulk products segment. Total Production Management and Risk Management. Adhering to Environmental Norms Since chemical substances are used in manufacture of consumer items such as paint. glue. Indian chemical industry needs to address various developmental issues such as sustainable chemistry. This could be further leveraged with techniques such as Good Manufacturing Practices. government and Improving Basic Management Capabilities Indian chemical industry has a good record of management expertise. adherence to safety and health and risk management. safety of chemicals and chemical products. environmental regulations were the principal reason for the relocation of manufacturing facilities from developed to developing countries. Liberalization process has already increased the possibility of intra-firm transfer of technology and management practices in the form of consolidation within the economy as also from developed countries through foreign direct investment. thereby improving competitiveness. In fact. Total Quality Management.Strengthening Technological Competence Indian chemical industry should strive for continually improving its production processes and products by investing resources in technology development. insect spray. To garner a greater share in world chemicals market. the chemical industry should undertake process innovation with the objective of reduction in cost of production. Such practices would result in quality improvement and lower cost. and their final disposal (hazardous waste). chemical producers have the responsibility in promoting safe management of substances – starting from design in production to end-use. the industry needs to invest in technological resources that would lead to specialized product development. cosmetics and household cleaners. Good Laboratory Practices.

Process innovation. The petrochemical sector should focus on application R&D. Firms in knowledge based chemical sector should focus on R&D with the objective of achieving product leadership and process innovations. and Research related to application/ safe use of chemicals. as new applications have to be identified to increase use and application of polymers. Exhibit 32 POSSIBILITIES OF COLLABORATION BY CHEMICAL INDUSTRY SOURCE: Exim Bank Research 69 . The basic chemical sector should focus on process innovation and product development and strengthen their competitiveness through improvements based on performance and quality of products. Indian chemical industry needs to focus on R&D in one or multiple areas. its purpose and nature varies across segments. While R&D remains an universal imperative. Equipments for production.community also have major role (in terms of preparedness for. and response to chemical accidents) to ensure chemical safety in a broadest sense. Focus on R&D Research and Development in the chemical sector may be undertaken in areas such as: ● ● ● ● Product development.

Information Technology (IT) can bring a good change in entire process cycle from technology. marketing expenses. Collaboration amongst players in the chemical industry could happen both at cluster level (for sharing of common infrastructure) as also at firm level (for sharing of knowledge and technology). through mergers Industry . Consolidation The new trend in chemical industry is competing through consolidation. Collaboration with firms across borders for technology and investment would also give a boost to the industry. and alliances are now achieving economies of scale all over the world. and enhanced presence in various regions. 70 . It is important for Indian chemical industry to consolidate their operations and emerge as global winners. An analysis of the global chemical industry shows that mergers and acquisitions have helped the combined entities consolidate their position in the market and enhance their revenues. Thus. The educational institutions could play a greater role for development of Indian chemical industry by offering courses and conducting research proactively. as most of the products in the chemical sector are commoditised. In addition. This will eventually result in higher efficiency for the industry. engineering and procurement to manufacturing. Chemical firms. Indian chemical industry should leverage the potential of educational and research institutions to source intellectual as well as human capital. increased efficiencies in supply chain management.Collaboration The chemical industry needs to enhance their collaborative efforts in order to improve competitiveness. partnership between industry and academia is a must. by integrating them with business processes in all these areas.Academia Linkages For transforming ideas into new products. Such consolidation exercises also provide for reduction in overheads. Increasing use of IT to transact business will also help the sector. the players should also achieve greater level of industry-institutional partnership for knowledge development and sharing. Such linkages may be effectively used for setting up of in-house R&D facility or for outsourcing R&D activities. The research and academic institutions may also open local offices within chemical clusters to facilitate greater level of interactions. Increasing ICT interface Chemical firms in India can gain a lot by making their manufacturing process IT-enabled. Consolidation helps the chemical industry in reduction of cost in their procurement and production.

It is also important to consider establishment of exclusive Chemical Zones on the lines of Special Economic Zones to give a fillip to the industry. These aspects can be easily tackled through adoption of superior process technologies and adhering to quality and environmental standards. in association with the Government may establish exclusive Chemical Parks – a concept similar to the Software / Hardware Technology Park. The industry. Most of the firms operating at the global level are big ones and enjoy economies of scale. export promotion and market development. However. Chemicals and Petrochemicals Investment Regions (PCPIR). the industry may be encouraged to set up mega chemical plants that could contribute to increased production as well as employment generation. De-reservation of Select Chemical Production Many chemical products are still reserved for production under small-scale sector. This could be achieved through increasing applications through R&D and enhancing the knowledge of end consumers. Setting up of Chemical Parks or Mega Chemical Estates In order to address the issue of capacity expansion and for creation of common infrastructure. Creation of Modernization Fund A modernization fund on the lines of technology upgradation fund established for the textile sector may be created to strengthen the technological competence of the industry. The Government has already initiated policies for setting up of integrated Petroleum.Marketing and Promotion Indian chemical industry should increasingly focus on marketing and promotion to achieve greater share in global chemical trade. has a major role in increasing the per capita consumption level in the domestic market. 71 . costcompetitiveness as well as technological compliance cannot be achieved without operating under scale economies. the chemical industry. thus. Increasing consumption level in the domestic market would ignite the prevailing latent demand. Increasing Consumption Levels of Chemicals Per capita chemical consumption in India is low as compared to world standards (estimated to be one-tenth of world average). De-reservation of chemical products reserved for production under small-scale sector can be a good measure to support the globalisation efforts of the industry. The industry may endeavour to concentrate more on issues such as brand building. In such Parks / Zones.

petrochemicals. conforming to international quality standards. Thus. In the years to come. opportunity for value addition using contract manufacturing or contract research. depends upon and determines the trends in the overall economy. Indian chemical companies with strong systems and organized operations are likely to be benefited further. fine and specialty chemicals. the chemical industry’s diversity relates to the pattern of demand to the changing standards of living. particularly in the context of India’s development process. with the reduction in tariffs. strategic marketing alliances with multinationals and trading companies for domestic sales and exports. the chemical industry bears a close correlation not only with the quantum of overall economic growth but also with the contents and quality of growth. cosmetic and toiletry product segments. as also the linkages with the rest of the world in terms of international trade. paints. and on the other. stricter enforcement of good manufacturing practices. by virtue of its diversity. backward and forward linkages and development of domestic capacity to reduce dependence on imported 72 . the range of products of the industry’s constituent segments are used in most productive activities. OUTLOOK Indian chemical industry has come a long way. Use of advanced technology. strong research capabilities. could translate their capabilities and establish a dominant presence in both international and domestic markets. investment flows and technology transfers.6. The performance and outlook of the chemical industry. On the domestic front. Today. On the one hand. Companies with competitive advantages. Specific to mention is the significant contribution of Indian chemical industry for the growth of India’s agriculture and healthcare sectors. pesticides. various new avenues are likely to arise in chemical industry like structural transformation. India has significant presence in production of basic organic and inorganic chemicals. like having competence in the areas of high value added chemicals. dyestuffs and intermediates.

as also corporate R&D centers. In addition. Indian Institute of Chemical Technology. 73 . commissioning assistance and even consultancy for re-engineering are available at low cost. plant process design. water management. safety. ICCA’s priorities include elimination of chemical tariffs by the year 2010. detailed engineering design. effluent management. bi-product reduction and use. In addition. simplification of customs procedures and full implementation of TRIPs agreement. R&D. Indian chemical industry has major strengths in basic research facilities available with CSIR laboratories such as National Chemical Laboratory. The need for globalisation has made many Indian chemical companies enter into strategic alliances or merge operations to achieve economies of scale. harmonization of anti-dumping practices. an association representing 80% of the world manufacturers of chemicals has reiterated its support for a new round of multilateral trade negotiations in the World Trade Organization. Indian manufacturers are addressing such challenges in an organized way. Foreign collaboration is also bringing solutions for clean technology. health and environment protection issues are becoming important challenges for the Indian chemical industry. upgradation of plant and equipment. energy reduction and conservation. skill development. Indian chemical companies are attempting to achieve global standards by improving productivity through various measures such as better raw material utilisation. The International Council of Chemical Associations (ICCA).raw materials are key success factors for Indian chemical industry. safe manufacture and environmental protection. process consultancy. While the harmonization of antidumping practices would benefit developing countries like India. the tariff-free world would pose stiff competition. This ensures that development of process knowhow. waste management. feedstock linkages.

ANNEXURE 1: SELECT PRINCIPLES OF GOOD LABORATORY PRACTICES SOURCE: Adapted from OECD 74 .

Russia. USA. Singapore & Thailand China Spain China Poland. Korea Denmark Korea. South Africa & Macedonia Russia Taiwan USA.ANNEXURE 2: ANTI-DUMPING CASES INITIATED BY INDIA AGAINST VARIOUS COUNTRIES IN THE CHEMICAL SECTOR (1992-2005) Sl. Korea China. Germany. Indonesia and Saudi Arabia Japan & USA (Contd. Malaysia and Romania France China China. Iran. Korea. Japan. Mexico and USA China China Japan China China Russia. Hong Kong. Kazakhstan.) 25 Aniline 75 . Czech. Turkey. Ukraine Germany. South Korea. European Union. Thailand & Indonesia Korea.. Korea. Taiwan & Malaysia China. USA. No Item 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 PVC Resin Potassium Permanganate Trimethoxy Benzaldehyde Acrylonitrile Butadiene Rubber Sodium Ferrocyanide Dead Burnt Mangnesite Low Carbon Ferro Chrome Acrylonitrile Butadiene Rubber Catalysts Purified Terephthalic Acid (PTA) Polystyrene Calcium Carbide Para Tert Butyl Catechol (PTBC) Citric Acid Styrene Butadiene Rubber Low Carbon Ferro Chrome (LCFC) Poly Tetra Fluoro Ethylene (PTFE) Acrylonitrile Butadiene Rubber Sodium Cyanide Polystyrene Barium Carbonate Pure Terephthalic Acid (PTA) Soda Ash Oxo Alcohols Country Brail. Germany and France China. Japan. Taiwan..

EU & China Canada. Romania. Singapore and Thailand China & Singapore Qatar EU. Japan.) 76 .. Singapore and South Africa China and Taiwan European Union Indonesia & Thailand Russia and Iran (Contd. Singapore & EU EU. USA.. France & Japan) European Union China China China. Brazil. Taiwan Singapore. No Item 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 Sodium Nitrite Sodium Ferrocyanide Caustic Soda Aniline Strontium Carbonate Phosphoric Acid Potassium Permanganate Sodium Hydrosulphite Zinc Oxide Choline Chloride High Styrene Butadiene 2-Methyl (5) Nitro Imidazole Hexamine Zinc Oxide Flexible Slabstock Polyol Poly-Iso-Butylene D (-) Para Hydroxy Phenyl Glycine base Caustic Soda Sodium Nitrite Isopropyl Alcohol Pentaerythritol Hydrofluoric Acid Acyclic Alcohols (Oxo Alcohol) Vinyl Acetate Monomer Phenol Sodium Tripoly Phosphate D (-) Para Hydroxy Phenyl Glycine Base Citric Acid Ammonium Nitrate Country China European Union Iran. Malaysia and South Africa Iran and Singapore EU. USA. Korea. Taiwan & Japan China Singapore.(Contd..) Sl. Hong Kong and Taiwan China China China and EU Poland and EU China Saudi Arabia and Russia Nepal USA. Brazil. Saudi Arabia. Japan..

Taiwan.. South Africa Singapore. USA. China and Brazil China and Sweden China SOURCE: Anti-Dumping Cases in India – Product Profiles. EU China EU.. Government of India 77 . EU and USA USA. Korea and USA China Japan. China.(Contd.) Sl. Korea and Taiwan China Korea Taiwan. Korea and EU Korea. Nigeria and Thailand. No Item 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 Caustic Soda D (-) Para Hydroxy Phenyl Glycine Methyl Dane Salt Hexamine Methylene Chloride and Singapore Isopropyl Alcohol Sodium Hydrosulphite Caustic Soda Borax Decahydrate Potassium Carbonate Titanium Dioxide Methylene Chloride Toluene Di-Isocyanate Melamine 6-Hexanelactam (Caprolactum) Flexible Slabstock Polyol Cyclohexanone Propylene Glycol Poly Vinyl Chloride (PVC) Paste Resin Rubber Chemicals Rubber Chemicals Acrylonitrile Butadiene Rubber Sodium Cyanide Citric Acid Polytetrafluoroethylene (PTFE) Sodium Formaldehyde Sulphoxylate (SFS) Ethylene-Propylene-NonConjugated Diene rubber (EPDM) Pentaerythritol Para Cresol Country Taiwan. China. Ministry of Commerce and Industry. EU. USA. USA EU (excluding Germany) Brazil & Mexico Taiwan China. Korea. Singapore. Japan. Indonesia and EU (excluding France) China and Singapore Iran European Union. Saudi Arabia. Ukraine and Korea China China European Union. Taiwan and Brazil Taiwan. EU. Netherlands Germany and Korea China and Korea China and Turkey EU.

8 0.0 12.5 4.3 N. 6.0 11.8 7.8 7.8 21.9 * CTHA – Chemical Tariff Harmonisation Agreement SOURCE: World Trade Organisation.6 4. 18. 2.8 5.1 2. 10.9 0.2 Average Bound Duty (%) 9.5 0. 14.4 6.1 4.0 24.1 2. 19. 5. 78 .6 5.A 3.6 2.ANNEXURE 3: MFN APPLIED AND BOUND TARIFFS FOR CHEMICALS AND PRODUCTS IN SELECT CTHA* COUNTRIES Sl. 13.1 4. Select CTHA Countries Australia Bulgaria Canada China Ecuador EU Hong Kong Japan Jordan Republic of Korea Mongolia New Zealand Norway Panama Qatar Singapore Taiwan UAE USA Average Applied Duty (%) 1.7 5.0 2.8 5. No 1.6 5.5 6.7 2. 15.8 7.0 3. 7. 16. 8.0 4. 12. 17. 11. 3.1 7.7 11.0 5. 4.6 0.3 2.8 6. 9.

ANNEXURE 4: LIST OF COUNTRIES THAT HAVE JOINED THE RESPONSIBLE CARE INITIATIVE America Region Argentina Brazil Canada Chile Colombia Ecuador Mexico Peru Venezuela Uruguay USA Africa Region Morocco South Africa Asia-Pacific Australia Hong Kong India Indonesia Japan Korea Malaysia New Zealand Philippines Singapore Taiwan Thailand West Asia Israel Turkey European Union Austria Belgium Bulgaria Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Netherlands Poland Portugal Slovakia Spain Sweden UK Other European Countries Norway Switzerland SOURCE: International Council of Chemical Associations 79 .

84 1.40 1.28 1.55 1.21 1. Vayupak Fund (10%). Government Savings Bank (10%) Monsanto Market Purchase PAI Partners Texas Pacific Group (UK) Dr.70 UCB Ensign-Bickford Industries Shareholders Creditors Crompton Corporation PTT (31. Government Pension Fund of Thailand (10%).00 5.21 2.ANNEXURE 5: MEGA DEALS IN GLOBAL CHEMICAL SECTOR IN 2005 Target Name Acquirer Value of Ultimate Transaction Seller (US $ Bn) 9. Mergers and Acquisitions Activity in the Global Chemicals Industry 2003-2005.5%) INEOS Access Industries The Chatterjee Group Existing shareholders International Petroleum Investment Company (IPIC) OMV Cytec Industries Macquarie Bank 1.70 3. XSYS Print Solutions BP 1.34 1.40 1.41 Seminis Huntsman Corporation Chr. Hansen (food ingredients) British Vita Waker-Chemie Flink Ink Corporation BP Solvay 1. Alexander Wacker Familiengesellschaft mbH CVC Capital Partners. 80 . Hansen British Vita Hoechst Family Flint Solvay SOURCE: PriceWaterHouseCoopers.01 BP BASF.24 1.05 Fox Paine Huntsman Corporation Chr.5%). Royl Dutch Shell Group Bayer Statoil Innovene IMC Global Lanxess Borealis Petrochemicals Group UCB (surface specialty business) Dyno Nobel (formerly Dyno Industrier) Great Lakes Chemical Corporation Thai Petrochemical Industry (61.

Dashiqiao Chemical Company Oryzalin Herbicide Business of Dow Agroscience Aciflorfen Compound of BASF Taubmans Paints (Fiji) Cropserve AG Value Inc Basell Country Egypt USA USA China USA Acquirer Asian Paints United Phosphorous United Phosphorous AV Birla Group United Phosphorous Activity Paints Pesticides Pesticides Carbon Black Agrochemicals Value (US$ Million) 5.30 Germany Fiji South Africa USA USA United Phosphorous Asian Paints United Phosphorous United Phosphorous Purendu Chatterjee (along with US based Access Industries) Jubilant Organosys Ltd Dishman Pharmaceuticals and Chemicals United Phosphorous Pesticides Paints and Varnishes Caustic Soda Pesticides Petrochemicals NA 1. 81 . Centre for Monitoring Indian Economy.00 SOURCE: Complied from Mergers and Acquisitions.40 NA 35. Mumbai.25 20.00 10. March 2007.75 NA Trinity Laboratories Inc (64%) C6 USA Manchester Chemicals Chemicals 12.00 NA NA 8.00 Reposo Argentina Crop Protection chemicals Construction Chemicals Chemicals 11.5%) Kansas (Soap Unit) Cerexagri Sintesis Quimica Dubai NA Singapore UK USA France Argentina Pidilite Industries Pidilite Industries Tata Chemicals VVF Ltd United Phosphorous Punjab Chemicals NA NA Oleo Chemicals NA Agrochemicals Chemicals 135.51 21.00 UCC Chemicals Chemson Asia (75%) Brunner Mond Group Ltd.ANNEXURE 6: SELECT FOREIGN ACQUISITIONS BY INDIAN COMPANIES IN THE CHEMICAL SECTOR Target Company SCIB Chemicals SAE 25% stake in midland fumigations 50% stake in KAW Valley Corp. (63.

63. 68. 64. 79. 67. 66. 70. 75. 77.A Roadmap Indian Export and Economic Growth Performance in Asian Perspective The Architecture of the International Capital Markets : Theory and Evidence International Technology Transfer and Stability of Joint Ventures in Developing Economies : A Critical Analysis The People’s Republic of Bangladesh : A Study of India’s Trade and Investment Potential Australia and New Zealand: A Study of India’s Trade and Investment Potential 82 CM YK . 60. 74. 82. 69. 81. 83. 85. 65. 71. Competition and Exports Indian Chemical Industry : A Sector Study Transaction Costs of Indian Exports : An Analysis SAARC Countries : A Study of India’s Trade and Investment Potential Sports Goods : A Sector Study International Joint Ventures and Technology Transfer in Developing Countries : Theoretical Analyses Union of Myanmar : A Study of India’s Trade and Investment Potential Foreign Direct Investment and Host Country Interaction : A Strategic Approach Exports in India’s Growth Process. 73. 76. 80. Latin American Countries : A Study of India’s Trade and Investment Potential People’s Republic of China: A Study of India’s Trade and Investment Potential lnstitutional Support Systems for SMEs in India and International Experiences Export Processing Zones in Select Countries : Critical Success Factors Essays in International Economics Institutional Support to SMEs : A Study of Select Sectors Indian Handicrafts : A New Direction for Exports Israel and India : A Study of Trade and Investment Potential Indian Handloom : A Sector Study Mumbai as an International Financial Centre . 61. 72. 62. 78.CM YK RECENT OCCASIONAL PAPERS Op. No. Title Engineering Consultancy Exports Export of Financial Services Theoretical Aspects of Liberal Trade Policies in Transition Economies: Exchange Rate. 84.

97. 115. 91. 99. 111. 88. Machine Tools: A Sector Study Agro and Processed Foods: A Sector Study Currency Risk Premia and Unhedged. 89. Foreign Direct Investments in Indian Manufacturing : An Analysis Maghreb Region: A Study of India’s Trade and Investment Potential Strengthening R & D Capabilities in India CIS Region: A Study of India’s Trade and Investment Potential 83 CM YK . 101. 114. 103. 116. 94.S. 93. 104. 90. 109. 100. 113. 110. 108. 107. Technology and Factor Endowments Essays on Trade in Goods and Factor Movements Under Increasing Returns to Scales Export of Organic Products from India: Prospects and Challenges Export Potential of Indian Medicinal Plants and Products Select Southern African Countries: A Study of India’s Trade and Investment Potential BIMST-EC Initiative: A Study of India's Trade and Investment Potential with Select Asian Countries Some Aspects of Productivity Growth and Trade in Indian Industry Intra-Industry Trade In India’s Manufacturing Sector Export Potential of Indian Plantation Sector: Prospects and Challenges Fresh Fruits. Foreign-Currency Borrowing in Emerging Market Mercosur: A Gateway to Latin American Countries Indian Silk Industry: A Sector Study Select COMESA Countries: A Study of India’s Trade and Investment Potential Sri Lanka: A Study of India’s Trade and Investment Potential Potential for Export of IT Enabled Services from North Eastern Region of India Potential for Export of Horticulture Products from Bihar and Jharkhand Increasing Wage Inequality in Developed Countries: Role of Changing Trade. 96. Vegetables and Dairy Products: India's Potential For Exports to Other Asian Countries Biotechnology: Emerging Opportunities for India ASEAN Countries: A Study of India's Trade and Investment Potentiala Essays on Globalisation and Wages in Developing Countries Select West African Countries: A Study of India's Trade and Investment Potential Indian Leather Industry: Perspective and Export Potential GCC Countries: A Study of India’s Trade and Export Potential Indian Petroleum Products Industry : Opportunities and Challanges Floriculture : A Sector Study Japanese & U. 102. 92. 105. 112. 106. 87.CM YK 86. 98. 95.

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